Definitive Report - Report No 243, March 1986

Case No 1329 (Canada) - Complaint date: 12-APR-85 - Closed

1. 159. The Canadian Labour Congress (CLC) - on behalf of the National Union of Provincial Government Employees (NUPGE) - presented a complaint of alleged infringements of trade union rights in a communication dated 12 April l985. It supplied additional information in letters dated 17 April and 12 September l985. The World Confederation of Organisations of the Teaching Profession (WCOTP) presented its complaint in a communication dated 13 May l985 on behalf of its affiliate, the British Columbia Teachers' Federation (BCTF). The Government sent its observations in a communication dated 20 January 1986.
2. 160. Canada has ratified the Freedom of Association and Protection of the Right to Organise Convention, l948 (No.87); it has not ratified the Right to Organise and Collective Bargaining Convention, l949 (No.98) or the Labour Relations (Public Service) Convention, l978 (No.l5l).

A. The complainants' allegations

1. 161. In its letter of 12 April l985, the CLC alleges that the Government of Canada/British Columbia has violated Conventions Nos. 87, 98 and 151 by prolonging indefinitely the compensation stabilisation programme introduced in February l982 to restrict wages of public sector employees in that province for a two-year period. It requests the ILO to send a study and information mission to the Province of British Columbia to examine the situation.
2. 162. In the documentation attached to the complaint it is alleged that the compensation stabilisation programme is contrary to the whole system of voluntary negotiation. For example, over the past three years the Government has consistently and arbitrarily reduced the maximum allowable wage increase under the programme's guide-lines and regulations: when the compensation stabilisation programme was introduced the Government stated that the guide-lines would provide a maximum allowable increase of 14 per cent; this was reduced in July l982 to 10 per cent, in July l983 to 5 per cent and finally, in December l983, to 0 per cent. Currently, the regulations state that public sector workers will get, at best, a wage freeze, and, at worst, a pay cut of up to 5 per cent, unless it can be demonstrated that an increase in productivity has occurred. Such a productivity increase would normally result only from staff reductions, longer hours of work or the elimination of different provisions of the collective agreement.
3. 163. According to the complainant, in addition to consistently lowering the wage ceilings, the Government has broadened the definition of "compensation" to include incremental increases a worker earns as he/she advances through the salary range. Under the original compensation stabilisation programme guide-lines and regulations these incremental increases were not included.
4. 164. According to the complainant, the Government also amended the Compensation Stabilisation Act in June l983 so that the employer's ability to pay must be given paramount consideration. Section 12.1 of the Act reads as follows:
   • In reaching or establishing a compensation plan for public sector employees, the parties to the plan or the public sector employer or arbitrator establishing the plan shall give paramount consideration to the ability of the public sector employer to pay that compensation. This concept is also incorporated in section l8 of the compensation stabilisation guide-lines. The complainant, however, considers that the concept of ability to pay is not one which can be fairly or meaningfully applied to the public sector. In the view of the complainant, if the Government decides to provide a service, then the Government should bear the necessary costs, provide fair and equitable wages and it should not expect public sector employees to subsidise the service by being forced to accept substandard wages.
5. 165. Also, according to the complainant, under the current Compensation Stabilisation Act, an arbitrator has very limited powers with which he/she may review an employer's assertion that it does not have the ability to pay. An arbitrator cannot examine questions of spending priorities, budget allocations or applications for further funding.
6. 166. The complainant points out that the original Compensation Stabilisation Act contemplated a voluntary process in which the parties were expected to try to remain within the compensation stabilisation guide-lines. However, with so many amendments to the Act and without any consultation with the trade unions affected, the Government has created a situation where the public sector unions do not know how the compensation stabilisation guide-lines will be applied. It states that during the last three years (involving 2,300 compensation plans) the compensation stabilisation programme's regulations have never been applied. In every case where compensation agreements have exceeded what the Commissioner perceived to be appropriate limits, the compensation agreement has been referred back either to the parties or their arbitrators to revise or re-submit to the Commissioner for further consideration. Effectively, the real choice for employees is between receiving a paltry increase or none at all under the guide-lines, and receiving no increase or a wage reduction under the regulations.
7. 167. A further problem with the programme is that, under section 25.1 of the Act, a compensation plan does not become enforceable until after it has been approved by the Commissioner. Section 25.1 reads as follows:
   • Notwithstanding any other provision of this Act, the guide-lines or the compensation regulations, a public sector employer shall not implement a compensation plan until the Commissioner has completed his review of it and has determined that the plan is within the guide-lines or, where the plan is subject to Part 3 has determined that the plan is within the compensation regulations. The complainant alleges that the role of the Commissioner is primarily partisan and therefore inappropriate for the adjudicative process. The guide-lines of the compensation stabilisation programme incorporate a broad discretion which can be exercised only by the Commissioner, which further lends an element of subjectivity and arbitrariness to his role.
8. 168. To its letter of 17 April l985, the CLC attaches a copy of a recent draft amendment to the Compensation Stabilisation Act which empowers the Commissioner to determine what wage increase, if any, public sector workers should receive. According to the CLC, the draft provision means that the Commissioner may not now consider any information obtained by a mediator and is obliged to take into account only the guide-lines contained in the legislation.
9. 169. NUPGE's communication of 12 September l985 - which is also signed by representatives of 15 British Columbian public sector unions which represent 175,600 workers directly affected by the Compensation Stabilisation Act - describes the functioning of the compensation stabilisation programme and confirms that the 1985 draft amendment empowering the Commissioner to set directly the terms of public sector compensation has become law. It points out that the Commissioner's actions cannot be reviewed by the normal courts (s. 24.1 of the Act) and that the programme does not apply to the private sector, nor is it accompanied by measures to control other forms of income, prices and provincial government expenditures.
10. 170. According to NUPGE, the wage controls have not guaranteed workers' living standards since the increase in the cost of living has consistently exceeded the small wage increases won by workers under the programme. It points out that arbitrators in the province have disapproved of the partisan role of the Commissioner and his lack of means to protect employees because he can only maintain or reduce compensation levels.
11. 171. Lastly, NUPGE recalls that the Committee has criticised aspects of the Act in the past (Case No. ll73) but the Government has not responded favourably. It requests that a study and information mission visit the province of British Columbia.
12. 172. The WCOTP, in its letter of 13 May l985, highlights the negative implications of the Act for teachers in particular. It states that voluntary agreements between teachers and school boards have been rejected and refused by the Government-appointed Commissioner while further legislative restrictions have been imposed on teachers' bargaining. For example, under the School Act (which governs collective bargaining in this sector) bargaining can only take place on monetary "salary and bonus" matters and the Government has ignored the requests of teachers' organisations to amend the Act to allow a wider scope for negotiations. In addition, the Education (Interim) Finance Act removed from the school boards their autonomy to determine required budgets, and a directive issued under the Financial Administration Act removed their right to determine the allocation of expenditure. Lastly, the amendment to the Compensation Stabilisation Act empowering the Commissioner to set directly the terms of a compensation plan, overriding a voluntary agreement between the parties, the permanency of this legislation and the reduced amounts set out in the regulations have eroded collective bargaining. The complainant also alleges that the Government, through its ministers, in particular the Minister of Education, has interfered in the bargaining process by making statements attacking teachers and by writing to school boards reminding them that no adjustments to teachers' salaries will be made. It concludes with a request that a study and information mission visit the province. (These allegations are presented in more detail by the WCOTP in the context of Case No. 1350, examined by the Committee in this report.)

B. The Government's reply

1. 173. In its communication of 20 January 1986, the Government recalls that the evolution of the compensation stabilisation programme is linked directly to the difficult economic conditions that have plagued British Columbia since 1981; it cites unemployment, loss of revenues and public-sector wage increase settlements running at 14.4 per cent in 1981.
2. 174. According to the Government, the complainants' contention that the programme has destroyed the collective bargaining in the public sector is without foundation because (1) the programme is based on wage restraint combined with negotiation; (2) it is flexible through its non-binding "guide-lines" and binding "regulations", recourse to the latter not having been necessary to date; (3) the process of submission of agreements to the Commissioner involves referral back to the parties if the settlement is found to be outside the guide-lines; and (4) there is no restriction on bargaining on non-monetary issues, e.g. negotiations are currently under way on productivity, health and safety, hours of work and job security. The Government stresses in this respect that most British Columbia public-sector workers have the right to strike. It also points out that it is incorrect to suggest that the programme places an upper limit on wage increases since increases to reward increased productivity are provided for.
3. 175. As regards the alleged discriminatory nature of the programme, the Government states that the objective of the programme is that public-sector wage increases should not take the lead over the private sector, where market forces had limited compensation during the recession. It cites statistics showing that, since its inception, wage settlements in the two sectors have been remarkably similar, the 1985 average annual increase being 1.7 per cent for the private and 1.9 per cent for the public sector. The Government points out that other action has been taken by the provincial government to control public expenditure and prices, e.g. three-year freeze on workers' compensation assessments, Rate Increases Restraint Act, freeze on ferry fares and reduction of vehicle insurance premiums.
4. 176. On the concept of ability to pay, the Government considers that this can be meaningfully applied to the public sector since the latter comprises autonomous employers (generating all of their own revenue), the rail and ferry corporations (generating a substantial part of their revenue), municipalities (enjoying considerable taxing powers) and others having varying financial independence from the Government. The Government recognises that, generally, government funding will affect the ability to pay of the public-sector employer to some degree, but states that this is by no means the sole determinant of employee compensation. It cites rulings by the Commissioner stating that budget allocation decisions of the employer or the Government "set the parameters within which collective bargaining may proceed" and criticising budgets contrived to prove inability to pay.
5. 177. As regards the allegation that the wage controls have prevented public-sector wage increases from keeping pace with the cost of living, the Government states that this is correct, but points out that employees covered by the programme have not fared worse than private-sector employees. It quotes statistics showing that, by the third quarter of 1985, both sectors' negotiated real wages stood at approximately -1 per cent less than the consumer price index.
6. 178. The Government stresses that the role and powers of arbitrators in the public sector are essentially an extension of the collective bargaining process and therefore are subject to the same laws and obligations as bind the parties themselves. As regards the allegation that an arbitrator's powers are limited in reviewing ability to pay, the Government states that he is only required to ensure that the public-sector employer in question has the money available to pay the increase awarded; thus, the programme merely requires arbitrators to reflect what would happen in practice. It also states that there is no legitimate basis for the suggestions of administrative bias in the role of the Commissioner, who is well known to be neutral in labour relations matters in the province.
7. 179. As regards the allegation that the 1985 amendment to section 21 of the Act (allowing the Commissioner to fix the terms of a compensation plan) proves that collective bargaining will be eliminated in the public sector, the Government maintains that this is a simple "housekeeping" measure to reaffirm the intent of other provisions of the Act and to ensure that parties made subject to the regulations - a situation which has not yet arisen - will have a plan rather than be caught "in limbo". According to the Government, given the record of voluntary compliance (over 85 per cent of plans initially submitted to the Commissioner over the four years of the programme have been found to be within the guide-lines), it is highly unlikely that the Commissioner will order any plan subject to the regulations. As for the other 1985 amendment to the Act (allegedly preventing the Commissioner from considering information obtained by a mediator), the Government points out that the language of the amendment was borrowed from the Labour Code which confirms the confidentiality of information obtained by Labour Relations Board employees in the course of their duties. The provision - which is a common feature of Canadian statute law - prevents a mediator's information being used in court or by any individual not directly associated with the programme. Thus, the impartiality of the mediator's role in assisting parties to negotiate a compensation plan is secured, and the parties are not constrained during negotiations in the presence of a mediator for fear that their remarks might be subsequently used against them in other proceedings. The Government points out that, under the guide-lines, the Commissioner may consider circumstances distinctive to the parties by referring to other matters which he may consider relevant; he can, therefore, review mediators' reports, and has done so.
8. 180. As regards section 24.1 of the Act (the privative clause), the Government states that this is a typical feature of Canadian statute law creating administrative tribunals. The provision was recently challenged in the British Columbia Supreme Court where it was upheld, the Court recognising that it is designed to maintain judicial restraint when the expert body (the Commissioner) acts within its mandate under statute, but to ensure judicial intervention if it goes beyond the limits of its jurisdiction.
9. 181. As for the request that a study and information mission visit British Columbia, the Government states that, if the Committee decides that this is required, the provincial government would be willing to give the request every consideration.
10. 182. The Government's reply to the specific allegations of the WCOTP regarding teachers' collective bargaining are set out in detail in the context of Case No. 1350 at paragraphs 300 to 303 of this report.

C. The Committee's conclusions

1. 183. The Committee notes that it has already made a thorough examination of the 1982 Compensation Stabilisation Act in the context of Case No. 1173, reaching definitive conclusions at its May 1984 meeting (see 234th Report, paras. 75 to 91). The new aspects introduced in the present case consist of (1) allegations that the permanency of the programme, and in particular the concept of employers' ability to pay and the constraints on arbitration, have almost destroyed public-sector collective bargaining; and (2) 1985 amendments to the Act and the recent reduction (to a possible -5 per cent) of increases allowable under the regulations have worsened the situation.
2. 184. As regards the basic Act - which establishes a programme of bargaining within non-binding guide-lines, submission of the compensation plan arrived at to the Government-appointed Commissioner for approval or referral back to the parties for renegotiation with the possible imposition of binding regulations and no judicial review - the Committee can only repeat its earlier conclusions in which it pointed out that the requirement of prior approval before a collective agreement can come into force is not in conformity with the principles of voluntary collective bargaining laid down in Convention No. 98. However, it also recalls that it has emphasised that ways should be found of persuading the parties to collective bargaining to have regard voluntarily in their negotiations to considerations relating to the economic or social policy of the Government and the safeguarding of the general interest. The Committee already pointed out to the Government that to achieve this, it is necessary, first of all, that the objectives to be recognised as being in the general interest should have been widely discussed by all parties on a national scale in accordance with the principle laid down by the Consultation (Industrial and National Levels) Recommendation, 1960 (No. 113); it might also be possible to envisage a procedure whereby the attention of the parties could be drawn, in certain cases, to the considerations of general interest which might require further examination of the terms of agreement on their part. However, persuasion is always to be preferred to constraint.
3. 185. In its previous examination of the present legislation, the Committee observed that if the guide-lines made by the Government are found by the Commissioner to be overstepped in a collective agreement, the collective agreement may be referred to the direct control of government regulations, any non-observance of which can be overruled by an order of the Commissioner which has the possibility of being enforced in the same manner as a Supreme Court order. The guide-lines, accordingly, are not of a persuasive nature and, in addition, it is not clear from the information before the Committee on the economic situation prevailing in 1981 before the introduction of the Act whether compensation stabilisation guide-lines were recognised as being in the general interest as is required by the above-mentioned principles. The Committee endorses this position all the more so since the 1985 amendments to the Act and the changes in the regulations remove, in practice, all choice from the negotiating parties.
4. 186. Despite efforts on the part of the Government to render the guide-lines more flexible and the non-imposition of the regulations in practice, the Committee can only express its regret that the Government has legislated to prolong indefinitely the compensation stabilisation programme first introduced in 1982 rather than take steps towards a return to a system of bargaining that is more in line with the above-mentioned principles. The Committee would once again point out that this programme, under which collective agreements or awards are converted into compensation plans which must be submitted for review to the Commissioner, is contrary to the principles concerning the process of voluntary collective bargaining.
5. 187. The Committee notes that, according to the Government, there has been a reversal of the public-sector-led wage increase spiral that existed in 1981, and that to date, 85 per cent of the compensation plans initially submitted to the Commissioner have voluntarily taken account of the guide-lines. In these circumstances the Committee can only express the hope that the Government will, at an early date, take appropriate steps, in the light of the principles stated above, to restore free collective bargaining between the parties and to remove the limitations currently imposed on this by the programme.
6. 188. The Committee requests the Government to keep the Committee of Experts on the Application of Conventions and Recommendations informed of the changes to the public-sector collective bargaining legislation and practice in the province.
7. 189. The Committee's conclusions on the WCOTP's allegations specific to the teaching sector appear in paragraphs 306 to 311 of this report.

The Committee's recommendations

1. 190. The Committee recommends the Governing Body to approve this report and, in particular, the following conclusions:
   • a) The Committee recalls the principle that the requirement of prior approval of collective agreements before they can come into force is not in conformity with the principles of voluntary collective bargaining laid down in Convention No. 98.
   • b) The Committee points out that the compensation stabilisation programme, under which compensation plans must be submitted for review to a Government-appointed Commissioner, is contrary to the principle of voluntary collective bargaining.
   • c) The Committee expresses the hope that the Government will, at an early date, take appropriate steps in the light of the principles stated above, to restore free collective bargaining between the parties and to remove the limitations currently imposed on this by the programme.
   • d) The Committee requests the Government to inform the Committee of Experts on the Application of Conventions and Recommendations of any changes in public-sector collective bargaining legislation and practice in the province.