Report in which the committee requests to be kept informed of development - Report No 364, June 2012

1. 391. The complaint is contained in a communication dated 30 March 2011 from the Canadian Union of Postal Workers (CUPW).
2. 392. The Government sent its observations in a communication dated 9 March 2012.
3. 393. Canada has ratified the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), but has not ratified the Right to Organise and Collective Bargaining Convention, 1949 (No. 98).

A. The complainant’s allegations

1. 394. In a communication dated 30 March 2011, the Canadian Union of Postal Workers (CUPW) indicates it is filing a complaint against the Canada Post Corporation Act (CPCA) which article 13(5) limits the right to collective bargaining in violation of ILO Convention No. 98. While recalling that the CPCA was enacted in 1981, the complainant observes that section 13(5) reads as follows: “notwithstanding any provision of Part I of the Canada Labour Code, for the purposes of the application of that Part to the Corporation and to officers and employees of the Corporation, a mail contractor is deemed not to be a dependent contractor or an employee within the meaning of those terms in subsection 3(1) of that Act”. Therefore, in the complainant’s view, section 13(5) explicitly prevents contractors of Canada Post to engage in collective bargaining. It constitutes an impediment to Canada Post contractors having rights as employees or dependent contractors under the provisions of the Canada Labour Code.
2. 395. The complainant recalls that post office workers and postal unions have been raising concerns about section 13(5) of the Canada Post Act since the mid 1980s, when the Association of Rural Mail Couriers of Canada applied for standing with the Canada Labour Relations Board review of the bargaining units of the Canada Post Corporation. The Board granted the Association of Rural Route Mail Couriers of Canada standing in the review in October 1986. However, the Canada Post Corporation challenged the Board decision on the basis of the provisions of section 13(5) of the Canada Post Act. It argued that rural route mail couriers fall under section 13(5) of the Act and therefore were not employees. Therefore, they could not form a union and bargain collectively. The Canada Labour Relations Board dismissed the challenge in April 1987. However the Canada Post Corporation appealed the decision in the Federal Court of Appeals which ruled that section 13(5) prevented rural mail couriers from being covered under the Canada Labour Code. Furthermore, the Supreme Court of Canada denied the rural route mail couriers permission to appeal the decision.
3. 396. In December 1998, the Organization of Rural Route Mail Couriers, with the active support of the CUPW and a number of other organizations filed a NAFTA complaint about the provisions of section 13(5) of the Canada Post Act. The complaint was turned down.
4. 397. The complainant states that in 2003, as a result of intense lobbying by the CUPW and the Organization of Rural Route Mail Couriers, the CUPW gained voluntary recognition with Canada Post to represent Rural and Suburban Mail Carriers (RSMC). It then negotiated a collective agreement which came into effect on 1 January 2004 and granted rural and suburban mail carriers employee status. The complainant asserts that it has been organizing Combined Urban Services (CUS) and Highway Service drivers (HS). CUS drivers are Canada Post contractors who deliver letter carrier mail to relay boxes, deliver parcels and pickup mail from street letter boxes and retail postal outlets.
5. 398. The complainant filed three applications for certification on 28 April 2008 in conformity with section 24 of the Canada Labour Code. Two of the applications involve bargaining units composed of CUS workers and the third, a bargaining unit composed of HS workers. In its reply, Canada Post argued that HS workers and CUS workers are mail contractors and are therefore deemed not to be employees pursuant to subsection 13(5) of the CPCA. The complainant is of the view that section 13(5) is contrary to the freedom of association protected pursuant to section 2(d) of the Canadian Charter of Rights and Freedoms.
6. 399. Despite the fact that the Canada Post Corporation challenged the right of the Canada Labour Relations Board to determine the Charter issue, the Board ruled on January 2009 that it had jurisdiction to consider the Charter issue. The Board released its reasons on the jurisdictional issue on 15 May 2009. The Board dismissed the Corporation’s application for reconsideration on 19 May 2009. The Corporation brought an application for judicial review of the Board’s jurisdictional decision. The Federal Court of Appeal heard the judicial review on 19 October 2010.
7. 400. The complainant indicates that the CUPW has also been organizing workers who provide postal services in retail postal outlets (RPOs) in private locations. However, the Canada Post Corporation has challenged its applications to represent these workers on numerous grounds, including arguing that section 13(5) prohibits these workers from exercising their right to collective bargaining.
8. 401. The complainant, recalling its slogan “13(5) keeps poverty alive”, asserts that since mail contractors are denied the right to collective bargaining, they have very limited possibilities to improve their wages and working conditions. It recalls that the Canadian Labour Congress reported a dramatic wages differential when it comes to wages of non managerial employees. Union members typically make over $5 per hour ($5.09) more than non-union workers. The difference is even greater for female employees who generally earn almost $6 more than their non-unionized counterparts. The complainant indicates that since the CUPW unionized and achieved Collective Agreements for RSMC's, it made the following gains: wage increases especially for the lower paid workers; coverage by Canada Post defined benefit pension plan; a dental plan; a grievance procedure; a hearing and vision plan; and much more. The complainant is of the view that section 13(5) of the CPCA is barring Canada Post contractors from making any type of similar gains.
9. 402. Recalling the ruling of June 2007 of the Supreme Court of Canada that the freedom of association provision of the Canadian Charter of Rights and Freedoms includes the right to free collective bargaining, the complainant therefore questions how section 13(5) of the CPCA can still remain in effect.

B. The Government’s reply

1. 403. In a communication dated 9 March 2012, the Government asserts that, in its view, section 13(5) of the CPCA does not deny mail contractors the right to organize as evidenced by the fact that numerous contractors have unionized, including some with the complainant organization. Furthermore, the Act was enacted for policy reasons after consultations with stakeholders including labour stakeholders and it is consistent with Canada’s international obligations under ILO Conventions, including Convention No. 98.
2. 404. While recalling that subsection 13(5) of the CPCA reads as follows: “Notwithstanding any provision of Part I of the Canada Labour Code, for the purposes of the application of that Part to the Corporation and to officers and employees of the Corporation, a mail contractor is deemed not to be a dependent contractor or an employee within the meaning of those terms in subsection 3(1) of that Act”, the Government indicates that a “mail contractor” is defined under section 2 of the CPCA as “a person who has entered into a contract with the Corporation for the transmission of mail ...”. It further recalls that subsection 3(1) of the Canada Labour Code defines the terms set out in the Code. The definition for “employee” includes dependent contractors, since “employee” means any person employed by an employer and includes a dependent contractor and a private constable, but does not include a person who performs management functions or is employed in a confidential capacity in matters relating to industrial relations.
3. 405. The Government recalls the history of and the rationale for the enactment of the CPCA, and specifically subsection 13(5) of the Act. On 16 October 1981, the Government enacted Bill C-42 (the CPCA) to change the governance regime of the Canadian postal service from that of a federal government department to that of a Crown corporation, a corporate entity with the Government as a shareholder. The Canada Post became a state-owned enterprise with a universal service obligation to provide a comprehensive national postal service at fair and reasonable rates. One of the primary reasons for changing Canada Post’s regime was the need to make it financially self-sustaining. The Government recalls that during the 1970s, the Post Office Department had run annual deficits, at times in excess of $600 million.
4. 406. The universal service obligation is a treaty obligation of Canada since Article 1.1 of the Universal Postal Convention binds Canada and other member nations of the Universal Postal Union (a specialized agency of the United Nations) to the “permanent provision of quality basic postal services at all points … for all customers, at affordable prices”. The Government states that Bill C-42 also sought to provide Canada Post with the means to ensure that it could continue to carry out the universal service obligation. The financial mandate is one such mean, and the limited “letter mail” exclusive privilege and section 13(5) of the CPCA are other means.
5. 407. According to the Government, section 13(5) was required to maintain the transportation contracting tendering process to respect the constitutional division of powers concerning labour relations by creating a clear separation between Canada Post and mail contractors for the purposes of Part I of the Canada Labour Code. Otherwise, Canada Post would be subjected to the increased costs that would have resulted if third-party contractors sought the benefits afforded to Canada Post employees. This would have jeopardized Canada Post’s ability to meet its mandate, including financial self-sufficiency. Canada Post had been contracting-out various work, in particular mail transportation-related services, for decades prior to its establishment as a Crown corporation. This still remains the case and contracting-out is still done by way of an open and competitive tendering process.
6. 408. Before enacting Bill C-42, the Government of Canada consulted a large number of constituencies, including the complainant organization (CUPW) and other trade unions, as well as the Canadian Labour Congress. The Government asserts that the interests and positions of these constituencies were considered in the legislative process. Several stakeholders appeared before the Parliamentary Committee to present their views on Canada Post becoming a Crown corporation, and a number were also implicated in the drafting of the legislation. The Canadian Labour Congress, which represents – among others – many Canadian postal unions, was heavily involved in the drafting and finalization of Bill C-42.
7. 409. The Government indicates that the parliamentary debates leading up to the enactment of Bill C-42 included repeated mention of rural contractors who, although their job was similar to that of urban, unionized colleagues, did not have the same benefits or remuneration. According to the Government, at the time, Canada Post’s trade unions, including CUPW, largely supported Bill C-42 in whole despite section 13(5). Postal unions were in favour of the new regime since it offered freer collective bargaining without the constraints experienced under the previous regime, and they anticipated greater labour peace and stability.
8. 410. The Government recalls that Canada has not ratified Convention No. 98. Nonetheless, it asserts that Canada respects the fundamental ILO principles of freedom of association and recognizes collective bargaining as part of the over-arching principle of freedom of association. Section 13(5) of the CPCA was considered necessary to maintain the transportation contracting tendering process, to respect the constitutional division of powers concerning labour relations, and to minimize increased costs which could jeopardize Canada Post’s mandate of being financially self-sufficient. In the Government’s view, these goals, taken together, were considered reasonable at the time by labour stakeholders when consulted on Bill C-42.
9. 411. While it may be considered unusual to have such a “deeming provision” as section 13(5) override a section of a public interest statute such as the Canada Labour Code, it is by no means unique in Canada. As a public institution with a social obligation (i.e. the universal service obligation), Canada Post is not unique in the application of industry-specific employment or labour-relations clauses to suit the unique characteristics of the industry. In other public institutions, exemptions exist for dispute settlements such as no strike/lockout clauses that apply to other essential public services, such as fire and police services.
10. 412. Notwithstanding section 13(5), some mail contractors in Canada Post have organized. As acknowledged by CUPW in their submission to the CFA, in 2003 CUPW organized the RSMC and negotiated a first collective agreement for these workers. As of 1 January 2004, 6,600 rural contractors became full-time Canada Post employees. Although the rural carriers who were the main focus of CPCA 13(5) eventually became unionized employees, there remain other mail contractors who work in third-party retail outlets such as pharmacies, or who transport the mail, who are not organized. However, the Government asserts that Canada Post and CUPW can voluntarily agree to engage in collective bargaining for such groups of workers.
11. 413. The Government observes that CUPW makes reference to section 2(d) of the Canadian Charter of Rights and Freedoms. This provision guarantees the freedom of association as a fundamental freedom, subject to reasonable limits prescribed by law. More recently, the Canadian domestic law has been clarified by a decision of the Supreme Court of Canada concerning a case in Ontario (Attorney-General) v. Fraser, 2011 SCC 20 (Fraser). In this case, the Supreme Court considered the scope of section 2(d) of the Charter in the context of the “process of collective bargaining”. Specifically, the Court concluded that section 2(d) protects associational activity, but not a particular process or result, and that it does not guarantee a particular model of collective bargaining or a particular outcome.
12. 414. In conclusion, the Government considers that the complaint is without merit since there is nothing in section 13(5) of the CPCA which prevents trade unions from organizing “mail contractors” directly or from “mail contractors” forming their own associations. Furthermore, Canada Post and the CUPW have the ability to voluntarily agree to engage in collective bargaining for such groups of workers. In fact, some mail contractors are now unionized under the CUPW and collectively bargain with Canada Post. Consequently, in the Government’s view, the complaint should be dismissed.

C. The Committee’s conclusions

1. 415. The Committee notes that this case concerns the alleged exclusion of mail contractors of the Canada Post Corporation (hereafter, the Corporation) from access to collective bargaining through section 13(5) of the Canada Post Corporation Act (hereafter, the CPCA). The Committee observes that the Act was enacted in 1981, and that post office workers and postal unions have been raising concerns about section 13(5) since the mid 1980s.
2. 416. The Committee notes that according to section 13(5) of the Act, which was enacted in 1981, a mail contractor of the Corporation is deemed not to be a dependent contractor or an employee for the purposes of the application of the Canada Labour Code to the Corporation and to officers. As a consequence, according to the complainant, this section 13(5) constitutes an impediment to the corporation’s contractors having rights as employees or dependent contractors under the provisions of the Canada Labour Code and explicitly prevents them to engage in collective bargaining.
3. 417. The Committee observes that the issue arose in the mid 1980s when the Corporation challenged the Canada Labour Relations Board decision to grant the Association of Rural Route Mail Couriers of Canada standing in the review of the bargaining units of the Corporation arguing that rural route mail couriers fell under section 13(5) of the CPCA and therefore since they were not employees, they could not form a trade union and bargain collectively. The Federal Court of Appeals ruled that section 13(5) prevented rural mail couriers from being covered under the Canada Labour Code. The appeal to the Supreme Court was denied to the rural route mail couriers.
4. 418. According to the complainant’s submission, in 2003, as a result of intense lobbying, the complainant organization gained voluntary recognition with Canada Post to represent RSMCs. It then negotiated a collective agreement which came into effect on January 2004 and granted rural and suburban mail carriers employee status. The complainant had also been organizing CUS and HS. In April 2008, the complainant filed applications for certification under section 24 of the Canada Labour Code. However, the Corporation argued that the workers concerned are mail contractors and are therefore deemed not to be employees pursuant to subsection 13(5) of the CPCA. The complainant indicates that it had also been organizing workers who provide postal services in retail postal outlets (RPOs) in private locations and that the Corporation has challenged its applications to represent these workers on numerous grounds, including arguing that section 13(5) of the CPCA prohibits these workers from exercising their right to collective bargaining.
5. 419. The Committee notes the fact that the Corporation challenged the right of the Canada Labour Relations Board to determine whether section 13(5) is contrary to the freedom of association protected pursuant to section 2(d) of the Canadian Charter of Rights and Freedoms. The Board ruled in January 2009 that it had jurisdiction to consider the Charter issue and released its reasons on the jurisdictional issue on 15 May 2009. Since the Board dismissed the corporation’s application for reconsideration on 19 May 2009, the latter brought an application for judicial review of the Board’s jurisdictional decision. The Federal Court of Appeal heard the judicial review on 19 October 2010. The Committee requests the Government and the complainant to provide information on the outcome of this hearing.
6. 420. The Committee notes the complainant’s view that since mail contractors are denied the right to collective bargaining, they have very limited possibilities to improve their wages and working conditions. Reference was made to several gains achieved following the collective agreements for RSMCs unionized by the CUPW. The complainant is of the view that section 13(5) of the CPCA is barring all other mail contractors from making any type of similar gains.
7. 421. The Committee notes the explanations of the Government on the rationale for the enactment of the CPCA, and specifically subsection 13(5). The enactment of Bill C-42 (the Act) meant to change the governance regime of the Canadian postal service from that of a federal government department to that of a Crown corporation, a state-owned enterprise with a universal service obligation to provide a comprehensive national postal service at fair and reasonable rates. One of the primary reasons for changing the Corporation’s regime was the need to make it financially self-sustaining. The Committee further notes the Government’s view that section 13(5) of the CPCA was required to maintain the transportation contracting tendering process to respect the constitutional division of powers concerning labour relations by creating a clear separation between the Corporation and mail contractors for the purposes of Part I of the Canada Labour Code. Otherwise, Canada Post would be subjected to the increased costs that would have resulted if third-party contractors sought the benefits afforded to the Corporation’s employees. This would have jeopardized the Corporation’s ability to meet its mandate, including financial self-sufficiency. The Committee notes the statement that Canada Post had been contracting-out various work, in particular mail transportation-related services, for decades prior to its establishment as a Crown corporation, and is still contracting-out by way of an open and competitive tendering process.
8. 422. The Committee also notes the indication that a large number of constituencies, including the complainant organization (CUPW) and other trade unions, as well as the Canadian Labour Congress, were consulted before the enactment of the Bill C-42. The Government asserts that the interests and positions of these constituencies were considered throughout the legislative process during which several stakeholders appeared before the Parliamentary Committee to present their views or were closely involved in the drafting and finalization of the Bill. According to the Government, at the time, Canada Post’s trade unions, including CUPW, largely supported Bill C-42 in whole despite section 13(5).
9. 423. The Committee notes the Government’s view that while it may be considered unusual to have a “deeming provision” such as section 13(5) overriding a section of a public interest statute such as the Canada Labour Code, it is by no means unique in Canada. As a public institution with a social obligation (i.e., the universal service obligation), the Corporation is not unique in the application of industry-specific employment or labour relations clauses to suit the unique characteristics of the industry. In other public institutions, exemptions exist for dispute settlements such as no strike/lockout clauses that apply to other essential public services, such as fire and police services.
10. 424. The Committee notes the Government’s statement that while Canada has not ratified Convention No. 98, it nonetheless respects the fundamental ILO principles of freedom of association and recognizes collective bargaining as part of the overarching principle of freedom of association. Notwithstanding section 13(5) of the CPCA, some mail contractors in Canada Post have organized. As acknowledged by the complainant, in 2003 it organized the Rural and Suburban Mail Carriers and negotiated a first collective agreement for these workers. The Committee further notes the Government’s indication that there remain other mail contractors who work in third-party retail outlets such as pharmacies, or who transport the mail, who are not organized. In its view, the Corporation and the CUPW could voluntarily agree to engage in collective bargaining for such groups of workers. The Government asserts that there is nothing in section 13(5) of the CPCA which prevents trade unions from organizing “mail contractors” directly or from “mail contractors” forming their own associations, or which would prevent the Corporation and the CUPW from voluntarily agreeing to engage in collective bargaining for such groups of workers.
11. 425. While taking due note of the explanations given by the Government on the specific circumstances and the rationale for the enactment of the Act and the purpose of its section 13(5), the Committee recalls that all workers, without distinction whatsoever, including without discrimination in regard to occupation, should have the right to establish and join organizations of their own choosing [see Digest of decisions and principles of the Freedom of Association Committee, fifth (revised) edition, 2006, para. 216].
12. 426. In this regard, the Committee recalls that measures should be taken to encourage and promote the full development and utilization of machinery for voluntary negotiation between employers or employers’ organizations and workers’ organizations with a view to the regulation of terms and conditions of employment by means of collective agreements. [see Digest, op. cit., para. 880]. The question before the Committee is not whether the workers which the CUPW seeks to represent are actually “employees” or independent contractors, but rather whether these workers are fully guaranteed the protection of freedom of association and collective bargaining principles that the Committee has elaborated over the years. In this regard, the Committee recalls that it has consistently maintained that workers, including independent contractors, should be able to fully enjoy freedom of association rights under Conventions Nos 87 and 98 for the purpose of furthering and defending their interests, including by means of collective bargaining.
13. 427. The Committee emphasizes once again that one of the main objects of the guarantee of freedom of association is to enable employers and workers to form organizations independent of the public authorities and capable of determining wages and other conditions of work by means of freely concluded collective agreements. Moreover, both employers and trade unions should bargain in good faith and make every effort to come to an agreement, and satisfactory labour relations depend primarily on the attitude of the parties towards each other and on their mutual confidence [see Digest, op. cit., paras 882 and 936]. While it is not the role of the Committee to determine the manner in which collective bargaining should be promoted in the specific circumstances of the case, the Committee must observe that the exclusion of the “mail contractors” from the Canada Labour Code by deeming them not to be “employees” appears to have resulted in their regularly being denied the possibility of effective union representation for the purposes of collective bargaining as can be seen by the numerous appeals made by the Canada Post Corporation when mail couriers and carriers tried to get standing for collective bargaining purposes.
14. 428. While the particular status of the mail contractors concerned here may call for clarification as regards the definition of bargaining units, the rules for certification, etc., as well as specific negotiations taking their status under the Act and their work requirements into account, the Committee fails to see any reason why the principles above on the basic rights of association and collective bargaining afforded to all workers should not also apply to mail contractors.
15. 429. The Committee takes due note of the Government’s assertion that there is nothing in section 13(5) of the CPCA which would prevent trade unions from organizing “mail contractors” directly or from “mail contractors” forming their own associations, or which would prevent the Corporation and the CUPW from voluntarily agreeing to engage in collective bargaining for such groups of workers. The Committee nevertheless observes that the issue raised by the complainant concerns the consistent reference to section 13(5) of the CPCA by the Corporation to deny registration of certain categories of mail contractors in a bargaining unit that would enable the union to begin a process of bargaining protected and promoted by the Canada Labour Code.
16. 430. Observing that the complainant and the Government both acknowledge that a number of mail contractors are now unionized under the CUPW and collectively bargain with the Corporation, the Committee wishes to emphasize that granting or denying the rights to organize and to bargain collectively based merely on the goodwill of the parties would remove all meaning from the fundamental nature of these rights. The Committee requests the Government to rapidly take all necessary measures, in consultation with the social partners, to ensure that all categories of mail contractors of the Corporation fully enjoy the rights to organize and to bargain collectively, as any other worker. Where needed, the Committee requests the Government to lift any obstacles – whether implicit or explicit – to the exercise of these rights and to keep it informed of any development in this respect.