Labour Arbitration in Canada

Honorable Warren K. Winkler, Q.C. (Chief Justice of  Ontario, 2007-2013)

The establishment of labour arbitration as an efficient, fair and cost-effective method of resolving workplace disputes in Canada can be traced back to a wartime measures act passed in 1944. The war years in Canada were a period of serious industrial unrest, characterized by strikes and other forms of conflict. The government’s wage control policies were a flashpoint for labour’s discontent and there was a tremendous growth in the labour movement. However, there was no statutory framework for compulsory union recognition or compulsory collective bargaining.

A number of factors led to the 1944 federal legislative initiative. In April 1943, almost a quarter of a million workers were involved in labour unrest, resulting in over a million workdays lost. In Ontario, Canada’s most populated province and its industrial heartland, the 1943 Collective Bargaining Act marked the first attempt in Canada to enforce an obligation to bargain collectively. As well, there was an emerging alliance between the labour movement and the CCF party (now the NDP), which began enjoying some electoral successes. In 1943, the CCF elected enough members to form the official opposition in Ontario.

The predominant features of the Ontario Collective Bargaining Act were concepts of majority rule and exclusive bargaining agency, compulsory collective bargaining, and a dispute resolution process. This legislation was modeled on the American Wagner Act of 1935 and influenced by the New Deal philosophy which suffused that legislation. However, the Ontario legislation provided for a labour court, rather than a labour board, to administer the legislation, with a rotating roster of judges.

The 1944 national labour code was immediately preceded in August 1943 by the government’s National War Labour Board Inquiry into labour unrest. The report recommended a new labour code, featuring compulsory collective bargaining. Privy Council Order 1003 marked a turning point in Canadian industrial relations, becoming a model for post-war labour legislation in Canada and featuring:

– a procedure for certification and compulsory recognition of trade unions with majority support

– recognition of the exclusive bargaining agency principle

– definition and prohibition of unfair labour practices

– remedies for unfair labour practices

– prohibition of “company unions”

– compulsory conciliation prior to a legal strike

– prohibition of mid-contract strikes and lockouts

-the establishment of a labour board, a quasi-judicial  administrative tribunal, to administer the legislation

Many of these features were also part of the Wagner Act in the United States; however the prohibition on mid-contract strikes was in contrast to that legislation. The permanency of these measures was ensured by the post-war enactment of the Industrial Relations Investigation Act at the federal level, which in turn became a model for provincial labour statutes. As a practical matter, the provincial statutes were of more significance in that the federal jurisdiction in labour relations is limited to matters such as interprovincial transportation, airlines, and telecommunications.

The legacy of PC 1003 and the contribution of post-war labour legislation is the statutory guarantee of a grievance arbitration procedure backstopped by arbitration. This was the original compromise embodied by the statutes:  a prohibition on mid-term strikes and lockouts in exchange for a dispute resolution procedure. This seminal bargain had a dual purpose:  to secure industrial peace and to provide industrial justice that was fair and expeditious.

The establishment of statutory labour boards effectively removed the resolution of labour disputes from the courts to administrative tribunals, with labour boards charged with administering all aspects of the labour legislation. When Ontario adopted the Collective Bargaining Act in 1943, a labour court, which was part of the High Court of Ontario, had exclusive jurisdiction to administer that Act. The labour court determined matters of certification, decertification, and configuration of the appropriate bargaining unit.

By the time the federal government enacted PC 1003, some valuable lessons had been learned from the Ontario experience. The court system, with its rules of evidence and processes, was not well suited to issues such as bargaining unit configuration that arose under the legislation. The judges lacked expertise in labour relations matters and rotated too frequently to acquire such expertise. The formality of the judicial approach was not conducive to the resolution of the problems that were presented. Accordingly, the experiment with a labour court was abandoned in Ontario.

In its place, the Ontario Labour Relations Board was established in 1944, with Jacob Finkleman as its first Chair. Mr. Finkleman had taught labour law at the University of Toronto and was considered to be the leading authority on labour law. His appointment and the new structure marked the end of the “judicialization” era in labour disputes and the beginning of labour relations expertise in the resolution of labour disputes. It was a trend that affected grievance arbitration, leading to the expectation that labour arbitrators would not only be neutral third parties but that they would bring specialized knowledge to ensure the fair, intelligent, and informed resolution of disputes between employers and unions.

With all of the post war labour statutes in Canada guaranteeing a dispute resolution procedure, parties developed systems that best served their needs. Some organizations used an ad hoc system of labour arbitration while others used permanent panels. Initially, the norm was tripartite panels, with the parties each appointing nominees who in turn would choose a neutral chair. The chair would preside over the panel and the grievance would be determined by the majority of the board, if the decision was not unanimous. Over time, many parties sought to reduce the expense and scheduling issues associated with tripartite panels and moved to a system of sole arbitrators.

In general, the system of grievance arbitration worked well in delivering on its goals of speedy, cost-effective, fair, and efficient justice for the parties. Grievance arbitration was responsive to the needs of workplace parties in a way that courts could never be. However, in many large workplaces the grievance system became clogged with large numbers of unresolved grievances. One of the reasons was the demand for the services of a very few, select arbitrators who were simply unable to deal with the volume of cases in a timely manner. To address this problem, the Ministry of Labour in Ontario enacted a system of statutory expedited arbitration and began to train arbitrators. At the outset Ministry employees provided grievance mediation services in connection with this process, but this service was subsequently discontinued. However, the mediation of grievances became more acceptable, with many arbitrators engaging in this process. The Ontario Labour Relations Act now provides for the appointment of a mediator-arbitrator upon a joint request of the parties. As well, it provides explicitly for the authority of the arbitrator to mediate grievances on consent of the parties, with the retention of the authority to determine the dispute by arbitration if it is not resolved through mediation.

One of the most significant developments in labour arbitration history in Canada has been the evolution of a broad jurisdiction, encompassing both statutory rights and civil disputes arising in the workplace that otherwise would proceed before the courts. This development evolved from decisions of arbitrators, the courts, and the legislators. In Polymer, a 1959 decision of arbitrator Bora Laskin, who subsequently became Chief Justice of the Supreme Court of Canada, the issue was the authority of the arbitration board to award damages as a remedy for an illegal strike. The union argued that the board did not have that power, pointing to the familiar “do not alter/amend” constraint in the collective agreement and relying on the “intention of the parties” principle – that is, that if the parties had intended to confer that jurisdiction, they would have expressed that intention. Accordingly, it was argued, the arbitration board’s jurisdiction was restricted to declaratory relief. The Laskin board determined that its remedial authority was much broader than declaratory relief and that an arbitrator possessed authority to provide such relief as would be necessary to redress violations of the collective agreement, including the awarding of damages. It was concluded that this authority existed notwithstanding the absence of any express provision to that effect in the collective agreement, as a necessary adjunct to the statutory command that arbitration provide for the final and binding resolution of disputes between the parties. The Polymer decision was upheld on judicial review and was followed by generations of arbitrators, with its central message of a broad remedial authority for arbitrators becoming unquestioned.

Significant judicial involvement in the evolution of the broad jurisdiction of arbitrators commences with the 1975 decision of the Supreme Court of Canada in McLeod v. Egan. That case involved employee discipline for refusing to work in excess of 48 hours per week. The employer argued that this practice was contemplated implicitly by the collective agreement, in particular the management rights clause, notwithstanding its contravention of the Employment Standards Act. At issue was the application of the statutory prohibition to the arbitrator’s considerations. Bora Laskin, now at the Supreme Court of Canada as the Chief Justice, stated that an arbitrator has an obligation to “construe a statute which is involved in the issues that have been brought before him.” Subsequently, in 1995, the Ontario Labour Relations Act was amended to specifically authorize arbitrators to “interpret and apply human rights and other employment-related statutes, despite any conflict between those statutes and the terms of the collective agreement”.

A 1995 decision of the Supreme Court of Canada in Weber v. Ontario Hydro has profoundly affected labour arbitration in Canada. That case involved a unionized employee who complained of back problems and took an extended leave of absence. His employer, Ontario Hydro, suspected him of malingering and hired private investigators. These investigators, under false pretenses, gained entry to his home. As a result of the information obtained from this investigation, the employer suspended Mr. Weber for abusing his sick leave benefits. The employee contacted his Union, and grievances were filed. Those grievances were eventually settled; however, the employee also commenced a court action against the employer based in tort and a breach of Charter rights. The main issue in Weber was whether the employee was precluded from pursuing the tort and Charter claims, on the basis that the collective agreement deprived the courts of jurisdiction.

The Supreme Court determined that a labour arbitrator has exclusive jurisdiction over all aspects of a dispute that (1) arises in its essential character from the interpretation, application, administration, or alleged violation of a collective agreement; and (2) falls within the ambit of a collective agreement, expressly or inferentially. With respect to the tort claim, the Supreme Court unanimously held that once a dispute is seen to arise out of the collective agreement, the jurisdiction of the arbitrator is exclusive, in accordance with the Labour Relations Act. The Court wrote:

Where the dispute, regardless of how it may be characterized legally, arises under the collective agreement, then the jurisdiction to resolve it lies exclusively with the labour tribunal and the courts cannot try it.

A majority of the Supreme Court also held that Charter claims, if they are components of the labour dispute, also lie within the jurisdiction of the labour arbitrator, and that labour arbitrators should be deemed “courts of competent jurisdiction” for the purpose of ordering a remedy.

In 2003, in Parry Sound & OPSEU, the Supreme Court of Canada addressed the jurisdiction of an arbitrator once again. That case involved a probationary employee who was terminated upon her return to work from parental leave. The collective agreement contemplated the ability of the employer to terminate a probationary employee at its discretion and resort to the grievance procedure was specifically precluded. The majority of the arbitration board found that it had jurisdiction to consider whether the dismissal had been discriminatory, given the 1995 legislative authority to interpret and apply statutory provisions. The Supreme Court ultimately concluded that the grievance was arbitrable, noting that: “… human rights and other employment-related statutes establish a floor beneath which an employer and union cannot contract”.

The consolidation of statutory, civil and collective agreement issues allows for the avoidance of fragmentation of disputes. No longer is there access to multiple administrative tribunals or the courts with the potential for multiple, potentially conflicting, decisions and remedies. Arbitrators can now address and resolve a myriad of disputes, including occupational health and safety claims, human rights claims, and defamation claims.

We are now at the stage at which the Supreme Court of Canada’s vision of an exclusive and expansive jurisdiction for labour arbitrators in Weber has been in place for two decades. This vision has been reinforced by legislation and by the response of arbitrators. The challenges are undeniable. The volume and complexity of the disputes are inevitably increased. Expectations of fair, efficient, and cost effective workplace dispute resolution are high. However, with the benefit of the legacy of giants such as Bora Laskin and Jacob Finkleman, the traditions of mediation, customized dispute resolution, expedition, independence, and even-handedness, the labour arbitration process has every potential to evolve to ensure that those expectations are fulfilled.