Definitive Report - Report No 337, June 2005

Case No 2349 (Canada) - Complaint date: 20-MAY-04 - Closed

Allegations: The complainant organization alleges that the Government did not bargain collectively in good faith with representative trade unions for the renewal of public service collective agreements, and did not rely on an independent arbitration system. Rather, the Government introduced back-to-work legislation (Bill No. 18) with harsh penalties to end a legal strike and impose by law a four-year collective contract containing wage freezes and contract concessions, including as regards some benefits previously negotiated for retired public servants

361. The complaint is contained in a communication dated 20 May 2004 from the National Union of Public and General Employees (NUPGE), on behalf of the Newfoundland and Labrador Association of Public and Private Employees (NAPE/NUPGE). Public Services International (PSI) and the Canadian Labour Congress (CLC) expressed their support to the complaint in communications dated 7 and 17 June 2004, respectively.

1. 362. The Government sent its observations in a communication dated 15 February 2005.
2. 363. Canada has ratified the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87). It has not ratified the Right to Organise and Collective Bargaining Convention, 1949 (No. 98), the Labour Relations (Public Service) Convention, 1978 (No. 151), nor the Collective Bargaining Convention, 1981 (No. 154).

A. The complainant’s allegations

1. 364. In its communication of 20 May 2004, NUPGE explains that the complaint is against the Act to provide for the resumption and continuation of public services (Bill No. 18) introduced in the Newfoundland and Labrador legislature on 26 April 2004 and proclaimed into law on 4 May 2004. Bill No. 18 was introduced to end a 27-day strike of some 20,000 public service employees which began on 1 April 2004. The striking employees are represented by two unions. Approximately 16,500 are members of the National Union’s Newfoundland and Labrador component (NAPE/NUPGE) and some 3,500 employees are members of the Newfoundland and Labrador division of the Canadian Union of Public Employees (CUPE).
2. 365. Bill No. 18 is much more than back-to-work legislation. It is a coercive tool that the Government used to legislate a four-year contract containing wage freezes and contract language concessions on public sector employees in Newfoundland and Labrador. It also contained the harshest penalties of any back-to-work legislation introduced in federal and provincial legislatures in the history of Canada. The Government announced on 20 April that it was going to introduce back-to-work legislation because of “the crisis the strike has caused the health-care system”, but took close to a week before introducing the legislation on 26 April in the provincial legislature. The legislation, however, covered all striking employees, the majority of whom do not work in the health-care sector.
3. 366. Subsequent to the legislation being introduced, NAPE/NUPGE and CUPE recommended to their members that the strike come to an end as of 27 April and all members return to work. As early as the evening shift on 27 April, some of the 20,000 striking employees began returning to work, with all returning to their jobs by the next day. The legislation had not yet been proclaimed, and with all employees back to work, there was no need for Bill No. 18 to be passed into law. The real reason for Bill No. 18 was to legislate the Government’s bad faith bargaining approach it consistently displayed throughout its negotiations with NAPE/NUPGE and CUPE.
4. 367. The 20,000 employees went on strike on 1 April 2004, the day after their collective agreements expired. They are covered by 11 separate contracts between NAPE/NUPGE and the provincial government and various public sector employers and five contracts between CUPE and various public sector employers. They are employed as either direct government employees, health-care professionals, hospital and nursing homes support workers, teaching assistants, support workers with schools and public colleges across the province, clerks in the province’s liquor stores, ferry workers or pilots employed with the emergency health, search and rescue operations.
5. 368. NAPE/NUPGE and CUPE were engaged in coordinated bargaining with the Government on core issues such as wages and benefits, while issues specific to individual bargaining units were separately negotiated. In June 2003, NAPE/NUPGE advised the Government that it wished to begin negotiations on behalf of 11 of its province-wide bargaining units and the Government agreed. NAPE/NUPGE told the Government at the time that the union would begin strike action on 1 April 2004 if no settlement was reached prior to contracts expiring on 31 March 2004.
6. 369. On 21 October 2003, a new Government was elected. On 18 November 2003, NAPE/NUPGE wrote to the new Government asking it to honour its predecessor’s commitment to begin negotiations. In good faith, NAPE/NUPGE’s negotiating teams presented proposals to the Government’s negotiators. For seven weeks, the Government’s negotiators refused to respond to NAPE/NUPGE’s bargaining proposals. The Government’s first response to NAPE/NUPGE’s bargaining proposals took place in the media and not at the bargaining table. Without any consultation with the union other than a one-hour notice, the Premier held a province-wide televised address on 5 January 2004, where he stated for the first time that his Government would be instituting a two-year wage freeze on public employees in the province because of the large deficit left by the previous Government. He repeated part of his election platform, indicating that the Government would reduce the size of its workforce through attrition (people retiring and resigning) predicting up to 6,000 jobs would be lost over the next five years. The Premier also indicated that the Government would be reneging on a commitment of “no lay-offs” that he made during the October 2003 election campaign.
7. 370. The Government’s portrayal of its large deficit and “dire fiscal situation” was based on very misleading evidence. The first news release issued by the Premier announced a request for proposals for an independent review of the province’s finances. The next day, the Government commissioned the consulting firm of Price Waterhouse Coopers (PWC) to conduct the review. The PWC report was released on 5 January in the same province-wide television address where he announced his Government would be instituting a two-year wage freeze on public employees in the province. The report highlighted two conclusions: the current year’s budget, introduced in May 2003 by the previous Government, understated the deficit for the current year; and the budget could not be brought into balance by the previous Government’s target year of 2007-08. It forecast a dramatic and continuing deterioration in the fiscal situation that could not be reversed without draconian actions.
8. 371. NAPE/NUPGE felt the PWC review presented a misleadingly negative picture of the province’s finances. For example, PWC chose to report the deficit on an accrual basis, as opposed to reporting it on a cash basis (the method used by previous provincial governments). The union therefore commissioned its own study of the Government’s fiscal situation which was conducted by the highly respected Canadian Centre for Policy Alternatives (CCPA). The conclusion of the CCPA study was that, while Newfoundland and Labrador must face a number of important issues of financial management in the next few years, provincial finances are not spiralling out of control, and they do not present an overwhelming crisis that justifies significant cuts to public services or the imposition of financial hardship on the Government’s employees. CCPA pointed out that the economic assumptions used by PWC were more pessimistic than those used by the major Canadian chartered banks. The CCPA report was based on more reasonable assumptions about economic growth and federal government transfer payments. It demonstrated that Newfoundland and Labrador’s cash deficit is not spiralling out of control to more than $700 million by 2007-08, but is relatively stable, at just over $280 million. CCPA also noted that the government-commissioned study by PWC contained highly political statements, inappropriate to the auditing profession. It was clear that the report was meant to create public fear in order to generate support for public sector wage freezes, public sector job losses, and cuts to public services.
9. 372. After publicly announcing a two-year wage freeze, the provincial government called in representatives of provincial government retirees on 21 January 2004 to tell them that the Government intended to renege on its commitment to contribute 1 per cent to the pension plan to help fund indexing for provincial government retirees over the age of 65. This indexing had been won as part of a settlement from a strike that took place in April 2001 by 19,000 NAPE/NUPGE and CUPE members. The unions agreed to have their members contribute a percentage of their pay for pension indexing, to be matched by the provincial government. The indexing, which was capped at 1.2 per cent per annum, went into effect in October 2003. It was the first increase in pension benefits for provincial government retirees since 1989.
10. 373. As there was no progress in negotiations on key issues, and given the Government’s refusal to take major concessions off the bargaining table, all NAPE/NUPGE’s and CUPE’s bargaining units applied for conciliation on 15 January 2004. NAPE/NUPGE broke off negotiations and began conducting strike votes on 15 February 2004 in order for its members to be in a legal strike position on 1 April 2004. The members gave NAPE/NUPGE the strongest strike mandate in the union’s history; overall, 91 per cent of the members voted in favour of a strike if no acceptable agreement could be reached by 31 March. On 21 March 2004, NAPE/NUPGE resumed negotiations with the Government but was still unable to make substantial progress.
11. 374. On 30 March, less than 36 hours before the strike deadline, the Finance Minister introduced the Government’s first budget. It was by far the toughest budget in the history of the province with either harsh cuts or the elimination of numerous government services and programmes. The budget negatively impacted on every public service and programme funded by the Government. As part of the budget, the Government announced a plan to slash 4,000 jobs in the provincial public service over the next four years, including 700 in 2004. This announcement was in direct contradiction to a personal commitment of “no public service lay-offs” made by the Premier during the October 2003 election campaign that brought him and his Government to power. It is the contention of NUPGE, as well as a number of public commentators, that the Government wanted to provoke a strike in order to deflect public attention from the harsh restraint measures contained in the budget. A week of bargaining at the end of March made some progress but by 31 March, it became abundantly clear to NAPE/NUPGE and CUPE that the Government was not interested in negotiating a settlement prior to the beginning of the strike.
12. 375. The Government’s final offer had two options for wages:
13. – a five-year agreement that included: a wage freeze in the first two years, a 2 per cent increase in the third year, a 3 per cent increase in the fourth year, and a 3 per cent increase in the fifth year; and
14. – a four-year agreement that included: a wage freeze in the first two years, a 2 per cent increase in the third year, and a 3 per cent increase in the fourth year.
15. The final offer also included major concessions from workers in the areas of sick leave, pensions, classification review, and hours of work for school-board employees. With the exception of sick leave, the Government’s position involved taking away the gains the unions had made after a six-day strike during the last round of bargaining in April 2001. As regards sick leave, the Government demanded to establish a two-tier system by cutting sick leave benefits in half for future employees.
16. 376. During the 27-day strike, and the six days between the end of the strike and the proclamation of Bill No. 18 (4 May 2004), NAPE/NUPGE and CUPE attempted to restart the negotiations on a number of occasions by making at least six new offers. The Government officially countered only two of the unions’ offers. Its first counter was on 9 April with an offer that still demanded the same four concessions and proposed wage increases that were less than the Government’s 31 March offer. The last counter offer from the Government came on 29 April, three days after Bill No. 18 was introduced and a day after the workers ended their strike; this offer was identical to the one made previously by the Government except that it provided the opportunity for new employees to earn the same sick leave as current employees after 20 years of service. Bill No. 18 however did not include this minor change in the Government’s sick leave position offered to the unions on 29 April.
17. 377. The Government’s bad faith approach to bargaining was constant throughout the strike. The Premier and the Finance Minister made many comments, both in the legislature and through the media, that they had been working hard to reach a settlement with the unions when, in fact, several calls made to them by the unions’ leadership requesting that negotiations be restarted were not returned. There were never any real negotiations but simply a repetition of the Government’s final offer made on 31 March. The most outrageous example of the Government’s bad faith bargaining approach could be seen in the actions of the Premier in the early days of the strike. On the first day of the strike, in a nationally televised outburst, he smeared the entire provincial trade union movement by linking it to a physical assault on his adult son without citing any evidence. He suggested, through innuendo and inference, that somehow union members were linked to a physical assault on his adult son. Insinuating that union members would choose to use violence against family members of the Government, he stated the following during a news conference on 1 April:
18. Let me just serve notice right now on anybody out there who is in a union: Don’t go near my family, or my home, or the homes of our ministers, or anybody else in our caucus, because I can tell you right now, they will be out until cows come home, if they go near any members of our family.
19. As can be seen from his statement, the Premier seemed to let the episode cloud his judgement in the handling of the strike. He was insinuating that 20,000 union members and the citizens of Newfoundland and Labrador would be left to deal with a strike because of unrelated actions taken against a family member of any of the government-elected representatives. Four days later, an individual with no union affiliation was charged with assault causing bodily harm to the Premier’s son. The Premier, however, refused to apologize to NAPE/NUPGE and CUPE and their members.
20. 378. On 2 April, the Premier took the very unusual move of going around the unions’ bargaining committee by negotiating directly with striking public sector workers on the picket line and providing them with misleading information on the Government’s last offer. His actions clearly indicated a bad faith approach to bargaining. NUPGE also contends that his actions were a serious violation of Article 3(2) of Convention No. 87, which states that public authorities shall refrain from any interference that restricts or impedes the unions’ right to organize their administration and activities and to formulate their programmes. NUPGE emphasizes that in a number of cases, the Committee commented on “the desirability of consulting the representative organizations with a view to ensuring freedom from any influence or pressure by the authorities which might affect the exercise of the right to strike in practice”.
21. 379. Bill No. 18 is one of the worst and most vindictive examples of labour legislations ever introduced in Canada. It terminates collective bargaining in the public sector of Newfoundland and Labrador for at least the next four years. It was introduced into the legislature and adopted without any consultation with the unions representing the 20,000 striking employees.
22. - Section 3 of the legislation severely limits the rights of union officials to freedoms of expression and speech by dictating what they can and cannot say to their membership. It required the union leadership to make a declaration to the striking employees they represent that their strike had become invalid and illegal.
23. - Section 4 of the legislation forced all striking employees back to work immediately and forbade any union official to “direct, encourage, aid or abet an employee” from returning to work.
24. - Section 5 dictated the wages, terms and conditions of employment of the 20,000 employees for a four-year period which will not end until 31 March 2008. It further stated that these wages, terms and conditions of employment will constitute the employees’ collective agreement. The wages, terms and conditions of employment referred to in section 5 are identical to the Government’s final offer it made to the unions on 31 March. One has to question the Government’s intention to bargain in good faith during the 27-day strike when it legislated the same offer it provided the day before the strike began. Section 5 also has the effect of completely eliminating any form of collective bargaining for these 20,000 employees for an unprecedented four-year period.
25. - Section 6 of Bill No. 18 contained the most severe punishment of any other back-to-work legislation that has been passed in the history of Canada for those who disobeyed the legislation. Employees who did not return to work immediately upon the Act coming into force would face immediate dismissal.
26. - The legislation also imposed unprecedented huge fines on the unions and their leadership. Union officers or representatives who encouraged workers to stay off the job were subject to fines of $25,000 a day. NAPE/NUPGE and CUPE could have been fined $250,000 a day for continuing the strike after the legislation passed. Union dues could be withheld from the unions by the Government and used to pay the fines.
27. 380. NUPGE contends that the Government, prior to the strike beginning, made a deliberate choice not to follow the Public Service (Collective Bargaining) Act, the provincial legislation that governs the collective bargaining process, but to impose by legislative fiat the Government’s original “bargaining” position. NUPGE also asserts that the Government prolonged the strike for no reason other than to punish the members of NAPE/NUPGE and CUPE for daring to disagree with the Government’s version of a “fair” offer. By imposing the wage freeze and concessions the Government had been demanding from day one of the strike, the Government made a mockery out of any claim that it bargained at all, let alone in good faith. Unacceptable as it would have been, rather than introduce back-to-work legislation during the first days of the strike, the Government vindictively chose to let workers walk the picket line and deny the citizens of the province access to public services for 27 days. It was only then that the Government decided to implement the decision it made at least a month before, to legislate its final offer and put an end to the strike. Evidence supporting these assertions is set out below.
28. 381. The Government’s stated reason for introducing Bill No. 18 was the growing crisis in the health-care sector with the health of the province’s citizens being at risk. One has to ask, if this was the case, why did the Government take four days from the time it announced it would be introducing back-to-work legislation (22 April) to the date it actually introduced Bill No. 18 in the legislature (26 April)? NUPGE underlines that every time the unions were asked by hospital medical directors to increase the number of employees over and above what was required by the essential services order, the unions complied with the requests.
29. 382. The unions also provided the Government with the option of sending the dispute to arbitration as set out in the Public Service (Collective Bargaining) Act. On 22 April, the presidents of NAPE/NUPGE and the Newfoundland and Labrador Division of CUPE wrote to the Premier stating that both unions were prepared to instruct their members “to return to work on Friday, 23 April and refer the remaining outstanding issues to binding adjudication pursuant to sections 32-37 of the Public Service (Collective Bargaining) Act”, which is the legislation that has governed labour relations and the collective bargaining process between all public sector employers and employees in the province (with the exception of the municipal government) since 1976. Section 30 of this Act allows for the provincial legislature to declare a state of emergency when it considers a strike of employees to be “injurious to the health or safety of persons or a group or class of persons, or the security of the province” and declare an end to the strike. Sections 32-37 of the Act are brought into play in the event that section 30 is invoked. These sections outline a process to have all matters in the dispute referred immediately to binding adjudication. The Government chose not to follow the legislative process that was available to them through the Public Service (Collective Bargaining) Act, but instead decided to implement separate legislation designed to ensure that its “bargaining” position was forced on the 20,000 striking employees.
30. 383. There was no need to proclaim the legislation as both NAPE/NUPGE and CUPE called an end to the strike once Bill No. 18 was introduced in the legislature and their members returned to their jobs on 28 April. Their return to work ended any reason for a state of emergency to be declared, as well as any reason for back-to-work legislation to be proclaimed.
31. 384. Negotiations between the Government and the unions did continue right up until the day before the legislation was proclaimed. The major outstanding issue continued to be sick leave and the Government continued to demand their concession for a two-tier sick leave plan. The unions could not, in principle, agree with the Government’s proposal because it would result in their members having different levels of benefits. NAPE/NUPGE and CUPE, however, did offer to send the outstanding issue to binding arbitration.
32. 385. The Government’s bargaining position appeared to be tied closely to the Premier’s personal position since there would be very little, if any, monetary gain for the Government in having a two-tier sick leave plan for employees. The Government’s proposal called for cutting in half the number of sick leave days for new employees. Considering the 30 March provincial budget included a plan to slash 4,000 jobs over the next four years, including 700 in 2004, there will be no opportunity for the Government to save any money from its proposal for at least the next four years. Despite the fact that there was no need to pass back-to-work legislation (other than to allow the Government unilaterally to enforce its final offer), the Government chose to end all bargaining and pass Bill No. 18.
33. 386. The basis for NUPGE’s complaint against the Government and its Bill No. 18 is based on several standards established by the Committee in many of the rulings it has made over the years. These standards are:
34. n government actions that seriously erode the confidence of employees in the collective bargaining process are contrary to Convention No. 87 on freedom of association and the protection of the right to organize;
35. n a government should give priority to collective bargaining as a means of determining employment conditions of its public employees;
36. n when a government imposes legislation restricting the collective bargaining rights of public employees, those employees should have access to a system of independent third party arbitration;
37. n whenever a total and prolonged strike in a vital sector of the economy might cause a situation in which the life, health or personal safety of the population might be endangered, a back-to-work order might be lawful. This order might occur if applied to a specific category of staff in the event of a strike whose scope and duration could cause such a situation. However, a back-to-work requirement outside such cases is contrary to the principles of freedom of association (Case No. 1543 and others);
38. n adequate consultation with unions representing public employees should take place prior to the introduction of legislation through which a government seeks to alter the bargaining process in which it actually or indirectly acts as the employer;
39. n employees generally have the right to strike deriving from Article 3 of Convention No. 87; provisions which effectively deny that right are in contravention of the Article (Case No. 1247).
40. 387. NUPGE concludes that the impugned legislation is contrary to the basic principles of the right to organize and collectively bargain in the public sector as set out in ILO Conventions Nos. 98 and 151, as well as the right to freedom of association as set out in ILO Convention No. 87 and the ILO’s 1988 Declaration on Fundamental Principles and Rights at Work. Unfortunately, the damage to collective bargaining in the public sector in Newfoundland and Labrador has already taken place. Collective bargaining in the provincial public service will not exist for at least a four-year period. NUPGE therefore requests that the ILO Committee on Freedom of Association strongly criticizes the government of Newfoundland and Labrador for:
41. n exercising unprecedented and extensive legislative interference in the public sector collective bargaining system instead of giving priority to collective bargaining as a means of determining wages and employment conditions of public health-care employees;
42. n abusing its legislative authority by imposing its final offer in four-year legislated collective agreements covering the 20,000 employees;
43. n failing to participate in an open and extensive consultative process with its employees prior to unilaterally imposing a legislative settlement; and
44. n failing to rely on the independent third party system of arbitration as a means to settle this public sector labour relations dispute.
45. B. The Government’s reply
46. 388. In its communication of 15 February 2005, the Government states that the Public Services Resumption and Continuation Act (PSRCA), is not in contravention of Conventions Nos. 87, 98 and 151, and states that the PSRCA was enacted as a last resort measure necessitated by the critical effect that the general strike of over 20,000 public employees had on the province’s responsibility to provide all aspects of public services to the people of Newfoundland and Labrador in a fiscally responsible manner. The Government adds that the contents of the 17 collective agreements scheduled to the PSRCA, reflect the significant progress and agreement made by the union and government negotiating teams both before and during the 2004 general public service strike. In fact, very few issues remained outstanding between the parties at the time the legislation was introduced. After 27 days of a vast public service withdrawal which was seriously affecting the provision of health-care and other basic public services, those items unresolved were legislated but the legislation did reflect the progress of the talks between the parties and is both fair and fiscally responsible.
47. 389. As regards the financial and fiscal contexts, in November 2004, immediately upon taking office, the Government engaged an internationally respected accounting firm to conduct a review of the province’s fiscal situation. The consultant’s report entitled Directions, choices and tough choices, released on 5 January 2004, concluded that the province was in dire economic straits with a current deficit of $877.5 million inclusive of a current cash deficit of $507 million. The Premier responded to the release of this report on the same day with a State of the province address, which outlined that serious fiscal restraint was critical in all areas of public expenditure, including employee salaries and benefits which account for approximately 52 per cent of the provincial budget. The Government denies that the Premier in any way breached the international labour Conventions by publicly addressing the people of Newfoundland and Labrador concerning the province’s financial situation or by outlining a general plan for dealing with the problem. There was no violation of any right to collectively bargain as, subsequent to the Premier’s State of the province address, collective bargaining proceeded with significant success.
48. 390. The unions gave notice to the province of their intention to bargain well before the pre-expiry deadline in the various collective agreements (all of which expired on 31 March 2004). That notice was given prior to the general election of 21 October 2003, which resulted in a change of Government. Negotiations commenced in January 2004, once the newly elected Government was cognizant of the financial situation and the collective bargaining issues. Negotiations continued in the normal course up to and throughout the strike. In fact, during the ten days leading up to the unions’ self-imposed strike deadline of 1 April 2004, union and government negotiators relocated to a local hotel where round-the-clock talks continued. In January 2004, the union applied for the assistance of a conciliation team from the Labour Relations Agency (the Labour Relations Agency is a neutral third party agency created by the Government, dedicated to fostering a positive labour management climate in the province through the provision of assistance through conciliation, facilitation and mediation services). The conciliation team, consisting of the director and five mediators, worked with the parties up to the unions’ self-imposed strike deadline of 1 April 2004, including the round-the-clock negotiations in the last ten days. Once the strike was called, the chief executive officer and the director of the Agency were actively and consistently involved in talks with the unions and the Government throughout the duration of the strike in an attempt to help them reach a negotiated settlement. The extreme efforts of the unions’ negotiators, the government negotiators and the conciliation team resulted in the agreement of many outstanding issues which form the bulk of the present collective agreements as outlined in section 5 of the PSRCA. At the time of the unions’ self-imposed strike deadline of 1 April 2004, considerable negotiations had occurred. There were a number of outstanding issues between the unions and the Government. Some of the major points of disagreement were salaries, sick leave, and the implementation of recommendations concerning hours of work for support staff in the education sector (the “Young/Warren” recommendations, see below).
49. 391. On 22 April 2004, after 27 days of a vast withdrawal of public services, and with little movement towards resolution on the three remaining issues, the Government introduced the PSRCA, which was a last resort solution to a rapid deterioration of the health-care system, that seriously crippled the education system and compromised general public services. Given the serious financial implications of the outstanding issues, it was the province’s position that a referral of these issues to binding arbitration to be determined by an unelected third party would be an irresponsible decision by a Government mandated by the people of the province to manage and control spending.
50. 392. As the title implies, the purpose of the legislation was twofold. Firstly, to direct the resumption of work by the striking public servants, and secondly, to ensure the continuation of their services. While it is correct that the vast majority of striking workers returned to work prior to the proclamation of the PSRCA, that action on behalf of the unions did nothing to ensure the stability of the workforce as services could have been withdrawn again at any time, with notice. Consequently, it was a prudent decision of the Government to introduce legislation providing for the resumption of work and the consolidation of the terms of the collective agreements incorporating the already agreed to items and the three outstanding issues: salaries, sick leave and the Young/Warren recommendations.
51. 393. The Government denies the unions’ submission that it reneged on its obligation to contribute to the indexing of pensions. At the end of the exercise, the legislation incorporated a Memorandum of Understanding (see below) with one amendment relating to the extension of time for both the unions and the province to explore joint trusteeship of the pension plan.
52. 394. The Government offers the following submissions regarding the three outstanding issues legislated:
53. - Salaries: The PSRCA provides for the following salary increases over the term of the contracts: 1 April 2004 – 0 per cent, 1 April 2005 – 0 per cent, 1 April 2006 – 2 per cent, and 1 April 2007 – 3 per cent. The Government submits that the salary component is reasonable in the context of the challenging financial situation faced by the province and the long-term strategies necessary to deal with the problem. Noteworthy also is the fact that the previous collective agreements resulted in a 15 per cent increase in wages of the three-year preceding term (2001-04). ILO principles and Conventions have consistently recognized that governments must be given some flexibility to deal with economic crisis that they may face. The Committee has stated frequently: “If, 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 it is necessary, without exceeding a reasonable period, and it should be accompanied by adequate safeguards to protect workers’ living standards.”
54. - Sick leave: The PSRCA provides that any employee hired after the date of coming into force of this agreement will accumulate sick leave at the rate of one day per month to a maximum of 12 days per year, with a total cap of 240 days. Sick leave expenditure is one of the most significant and difficult to contain employee benefit expenses in the public service. Given the bleak financial outlook, it was initially the Government’s position that sick leave entitlement be reduced for current employees. However, as a compromise, it settled with a go-forward approach such that sick leave entitlement is not reduced for current employees but applies only to new employees. This is a prudent, long-term approach which in no way affects the current unions’ membership.
55. - Young/Warren recommendations: The Young Mediation Report formed the basis of a Memorandum of Understanding (MOU) between the parties relating to the hours of work for school-board support staff employed in the education sector. The MOU was included in the school boards’ association collective agreement which expired on 31 March 2004, and the Government complied with all its terms. The Warren Report, authored by an independent consultant retained by the Government subsequent to the Young Mediation Report, put forward recommendations on the issue of hours of work for school-board support staff employed in the education sector. These recommendations did not form part of the previous collective agreements but were contained in the unions’ proposals in the 2004 round of negotiations. There are approximately 750 employees affected by these reports.
56. 395. The Government submits that the PSRCA does not in any way violate the right to freedom of association under Convention No. 87. The restraints placed on trade union activity in the legislation was solely to allow for a peaceful resumption and continuation of striking employees. No restrictions have been placed on employees with respect to their right to associate or their right to organize.
57. 396. With respect to the alleged violation of Convention No. 87 by the Premier arising from his conversation with picketers while on route to his office, this conversation was nothing more than an exchange of information. The Premier discussed with the employees the latest government offer that was on the table at the time and known to the union negotiators. There was no interference with the unions’ right to organize their administration and activities and no attempt to undermine the unions in any way.
58. 397. With respect to the alleged violation of the right to bargain collectively under Conventions Nos. 98 and 151, the Government states that, while Convention No. 151 remains unratified by Canada, it has nonetheless complied with its provisions and principles. Restrictions on the right to bargain collectively in response to severe economic difficulties have been accepted by the Committee where the circumstances are of an exceptional nature and only to the extent they may be necessary. The legislation was enacted in response to a situation where the resumption of public services was critical to the well-being of the people of the province. Furthermore, the vast majority of the terms of all 17 agreements resulted from the hard work of the negotiating and conciliation teams. The issues that were legislated were done so as a last resort and against a bleak background of economic challenges. The four-year term includes two significant salary increases and reflect the Government’s commitment to treat its employees with respect and fairness.
59. 398. The Government concludes that the PSRCA does not violate any of the principles, declarations or provisions of international labour Conventions.

C. The Committee’s conclusions

1. 399. The Committee notes that this case concerns back-to-work legislation (the Public Services Resumption and Continuation Act (PSRCA), see Annex 1, extracts) adopted by the government of Newfoundland and Labrador. The PSRCA, which contains harsh penalties, put an end to a legal strike in the public service and imposed a four-year collective contract; the complainant organization alleges that the Government did not bargain collectively in good faith with representative trade unions and did not rely on independent arbitration. The Government replies that the PSRCA was a last resort measure to put an end to a general strike of over 20,000 public employees which affected the provision of health-care and other basic public services, as well as a fair and fiscally responsible answer to the unions’ demands, in view of the financial situation of the province. The Government and the complainant organization both rely on reports on the fiscal situation of the province, drafted by two different firms, which came to different conclusions.
2. 400. The Committee points out that it is not mandated, nor equipped, to decide on the relative weight to be attached to the two diverging reports on the fiscal situation of the province, and on the justification of measures that might eventually flow from these reports. Likewise, the Committee is not called upon to decide whether or not the pay and other work conditions (e.g. concerning sick leave) imposed by the Government are “reasonable”. Rather, the Committee’s mandate is to assess whether, in adopting the PSRCA in the circumstances of the case, the Government complied with freedom of association principles.
3. 401. The Committee notes at the outset that the strike in the present case was a lawful one, as the complainant organization had fulfilled all legal requirements prior to launching a strike to support its demands. While a significant number of issues were actually negotiated, both through direct bargaining and with the help of mediation and conciliation services, the fact is that, ultimately, the Government imposed through the PSRCA the terms of a four-year collective agreement as regards the remaining bargaining issues, including wages. Taking into account the long duration of this imposed contract, the Committee invites the Government to hold consultations with the unions concerned with a view to a possible re-examination of these imposed working conditions.
4. 402. The Committee takes note of the severe penalties provided for in the PSRCA (see Annex 1) which rendered a continuation of the strike untenable, and that all workers had gone back to work (27 and 28 April 2004) at the time the PSRCA was proclaimed (4 May 2004).
5. 403. The Committee further notes that, on 22 April 2004, the complainant organization wrote to the Premier in the following terms: “While it has been, and continues to be, our preference to negotiate a collective agreement, we believe it is unlikely that the parties will now be able to resolve this matter through negotiations. In a final attempt to resolve this dispute without the introduction of extraordinary legislation, and in an effort to resume the provision of public services, we are now proposing that the parties use the provisions of the Public Service (Collective Bargaining) Act to resolve this matter. NAPE and CUPE are prepared to instruct our members to return to work on Friday, 23 April 2004, and refer the remaining outstanding issues to binding adjudication pursuant to sections 32-37 of the Public Service (Collective Bargaining) Act. We believe that this will enable the parties to consider the greater interests of the province and resume the provision of public services immediately. The offer is made in good faith in an effort to resolve this dispute and we hope that you share our desire to find a fair and equitable settlement.” [See Annex 2, extracts of the Public Service (Collective Bargaining) Act.]
6. 404. The Committee wishes to emphasize that measures should be taken to encourage and promote the full development and utilization of machinery for voluntary negotiation between employers’ and workers’ organizations, with a view to the regulation of terms and conditions of employment by means of collective agreements [see Digest of decisions and principles of the Freedom of Association Committee, 4th edition, 1996, para. 781]. The Committee also recalls that the voluntary negotiation of collective agreements, and therefore the autonomy of the bargaining partners, is a fundamental aspect of the principles of freedom of association; collective bargaining, if it is to be effective, must assume a voluntary character and not entail recourse to measures of compulsion which would alter the voluntary nature of such bargaining [see Digest, op. cit., paras. 844-845].
7. 405. Noting nevertheless the complainant organizations’ offer to the Government to use the existing legislative provisions on the settlement of disputes in the public service through adjudication, the Committee has difficulty appreciating the Government’s argument that a referral of the outstanding issues to binding arbitration to be determined “by an unelected third party” would have been an irresponsible decision, particularly in view of the fact that the Government could have provided the arbitrator with full data on the province’s fiscal situation, and the fact that these provisions are precisely meant to cover such situations and resolve bargaining deadlocks in the public service. Rather, the Government chose to adopt back-to-work legislation and unilaterally impose terms and conditions on outstanding issues, at a time when the workers were already back at work, and their union had offered to submit the dispute to binding arbitration, as provided for in the law.
8. 406. Recalling that in contexts of economic stabilization, priority should be given to collective bargaining as a means of determining employment conditions of public servants, rather than adopting legislation to restrain wages in the public sector [see Digest, ibid., para. 900], the Committee considers that in the circumstances, the Government should have given primacy to collective bargaining. In the event that it had become clear that the pending issues could not be resolved through collective bargaining, the Committee stresses the importance, in cases concerning the public service, of having recourse to mediation and arbitration proceedings that have the confidence of the parties concerned. Recourse to back-to-work legislation that unilaterally imposes the position of one of the bargaining partners, as opposed to having recourse to existing mechanisms that benefited from the confidence of the unions concerned (as shown by their own offer to refer the outstanding issues to binding arbitration) clearly cannot be considered to be conducive to stable and harmonious industrial relations in which the parties may be confident. The Committee strongly urges the Government to refrain in future from adopting such back-to-work legislation, and to use the adjudication process provided for in the legislation to resolve bargaining impasses such as the present one.

The Committee's recommendations

1. 407. In the light of its foregoing conclusions, the Committee invites the Governing Body to approve the following recommendations:
   • (a) Noting that the Government violated freedom of association principles through the adoption of back-to-work legislation, the Committee strongly urges it to refrain from adopting such legislation in the future, and to use the adjudication process provided for in the legislation to resolve bargaining impasses.
   • (b) Taking into account the long duration of the imposed contract (four years), the Committee requests the Government to hold consultations with the unions concerned with a view to a possible re-examination of the imposed working conditions.

Annex 1

1. An Act to provide for the resumption and
2. continuation of public services (extracts)
3. ...
4. 3.(1) Immediately upon the coming into force of this Act, the unions and each official or representative of the unions shall give notice to the striking employees whom they represent that a declaration or direction to go on strike, declared or given to them before the coming into force of this Act, has become invalid by reason of the coming into force of this Act and shall direct the employees to return to work immediately.
5. (2) After the unions have complied with subsection (1), neither they nor their officials or representatives, shall, during the period the terms and conditions of employment referred to in section 5 are in force, engage in actions for the purpose of compelling an employer to agree to terms and conditions of employment that are different from those referred to in section 5.
6. 4.(1) Immediately upon the coming into force of this Act every employee shall cease actions engaged in for the purpose of compelling an employer to agree to terms and conditions of employment and, where applicable, shall continue or resume the duties of his or her employment.
7. (2) A union and an official or representative of a union and another person acting on behalf of a union shall not direct, encourage, aid or abet an employee to engage in an action contrary to subsection (1).
8. (3) Neither a union, nor an official or representative of a union, nor a person acting on behalf of a union, shall, in any manner, discipline, or direct or authorize another person to discipline, by way of suspension or expulsion from the union, the imposition of a fine or otherwise, a person for the reason only that the person complies with subsection (1).
9. ...
10. 6.(1) Where a union fails to comply with section 3 or subsection 4(2) or (3), it is guilty of an offence and is liable on summary conviction to a fine of $250,000, and in the case of a continuing offence, to a fine of $250,000 each day or part of a day during which the offence continues.
11. (2) Every official or representative of a union who fails to comply with section 3 or subsection 4(2) or (3), and a person acting on behalf of a union who fails to comply with subsection 4(2) or (3), is guilty of an offence and is liable on summary conviction to a fine of $25,000 and, in the case of a continuing offence, to a fine of $25,000 for each day or part of a day during which the offence continues.
12. (3) Every employee who fails to comply with section 4 is dismissed.
13. (4) Each day or part of a day that a failure to comply with section 3 continues constitutes a new and separate offence.
14. (5) Where a union is convicted of an offence under subsection (1), an amount of wages deducted from an employee as union dues shall be considered forfeit to the Crown and shall be paid by the employer into the Consolidated Revenue Fund until a fine which the union is liable to pay under subsection (1) has been paid in full.
15. Annex 2
16. Public Service (Collective Bargaining) Act
17. (extracts)
18. ...
19. State of emergency
20. 30.(1) Where the House of Assembly resolves that a strike of employees is or would be injurious to the health or safety of persons or a group or class of persons, or the security of the province, it may declare that, from and after the date stated in the resolution, a state of emergency exists and forbid the strike of all employees in a unit specified in the resolution, and may order the employees of the unit to return to duty either immediately upon publication of the resolution in the Gazette or at a later time that may be stated in the resolution.
21. (2) An employee, to whom an order made under subsection (1) applies, who fails to return to duty within the time stated in the order is guilty of an offence under this Act.
22. Lock-out
23. 31.(1) Where, by this Act, an employee is prohibited from striking or participating in a strike, the employer shall not close the place of employment to the employee, or dismiss, or suspend the employee from work, or otherwise refuse to continue to employ the employee for the purpose of compelling the employee, or helping another employer to compel his or her employees, to agree to terms and conditions of employment.
24. ...
25. Adjudication
26. 32.(1) Where
27. (a) the House of Assembly resolves that a state of emergency exists under section 30; or
28. (b) all employees in a unit are considered because of subsection 10(6) to be essential employees, and 14 days elapse from occurrence of either of the events specified in paragraphs 25(a) and (b),
29. the chairperson of the board shall immediately, by written notice to the employer and the bargaining agent, order that the matters in dispute between them be referred immediately to adjudication.
30. (2) Each party to whom notice is given under subsection (1) shall, within 7 days after receipt of the notice, advise the chairperson of the board by written notice of
31. (a) all the matters in dispute, with proposals towards settlement of the matters; and
32. (b) the name of a person to act as a member of the adjudication board.
33. (3) Upon receipt of each nomination referred to in paragraph (2)(b), the chairperson shall immediately appoint the persons nominated as members of the adjudication board.
34. ...
35. Adjudication board
36. 33.(1) The adjudication board shall consider the matters in dispute together with the other matters which it considers to be incidental to the disputed matters as soon as possible after the reference to it of those matters and give judgment within 45 days after the reference or within a later time, which shall not exceed 90 days from the date of the reference, that the chairperson of the adjudication board may determine, but in giving a judgment, the adjudication board shall take into account
37. (a) the health, safety and interests of the public;
38. (b) the terms and conditions of employment of employees in occupations similar to those being considered, whether or not the employees are employees to which this Act applies, account being taken of the geographic, industrial, economic, social and other variations that the adjudication board considers relevant;
39. (c) the need to establish terms and conditions of employment that are fair and reasonable in relation to the qualifications required, the work performed, the responsibility assumed and the nature of the service provided;
40. (d) the needs of the employer for qualified employees; and
41. (e) other matters that appear to the adjudication board to have a relevant bearing to the matters in dispute.
42. (2) Where, before judgment, the parties reach agreement on a matter in dispute referred to it for adjudication and enter into a collective agreement in respect of it, the matter shall be considered to have been withdrawn from the reference and a judgment shall not be given by the adjudication board in respect of that matter.
43. (3) A judgment shall relate only to the matters referred to it by the chairperson of the board and shall not relate to salaries, wages and other terms and conditions of employment of employees who are not in the unit in respect of which the reference is made.
44. ...
45. Judgment binding
46. 35.(1) A judgment is binding on the employer, the bargaining agent and on the employees in the unit and, unless the judgment provides for retroactivity as provided in subsection (2), effective from the date on which the judgment is given or a later date that may be stated in the judgment.
47. (2) A judgment respecting terms or conditions of employment of employees in the unit may specify that any or all the terms and conditions shall have retroactive effect to a date not earlier than the date on which notice to start collective bargaining was given under section 13 or 14.
48. (3) Where any or all of the provisions of a judgment conflict with the terms of an earlier judgment affecting the parties, the provisions of the judgment shall prevail for the term determined in accordance with section 36 for which the judgment is operative.