Rapport où le comité demande à être informé de l’évolution de la situation - Rapport No. 284, Novembre 1992

1. 549. In communications dated 31 October and 6 December 1991, the Canadian Labour Congress (CLC) submitted a complaint of violations of freedom of association against the Government of Canada (Newfoundland), on behalf of the National Union of Provincial Government Employees (NUPGE) and the Newfoundland Association of Public Employees (NAPE). The International Confederation of Free Trade Unions (ICFTU) and the Public Services International (PSI) expressed their support of the complaint in communications dated respectively 8 and 12 November 1991.
2. 550. The federal Government, in a communication of 10 April 1992, transmitted the observations and information from the Government of Newfoundland.
3. 551. 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), or the Collective Bargaining Convention, 1981 (No. 154).

A. The complainant's allegations

1. 552. In its communication of 31 October 1991, the complainant organisation alleges that the Government of Newfoundland violated Conventions Nos. 87, 98, 151 and 154 by enacting, on 31 March 1991, Bill 16, the Public Sector Restraint Act, hereinafter called "the Act". (For ease of reference, the main substantive provisions of the Act, in particular those quoted and relied on by the complainant and the Government, are reproduced in the Annex to this document.)
2. 553. The complainant contends that the Act is a further piece of anti-union legislation in Newfoundland, which has a lengthy history of enacting legislation which restricts the rights of public sector workers.
3. 554. The first attack on public sector workers came on 6 November 1981 with the proclamation of strike-breaking legislation known as Bill 111, which was the result of a dispute between the Newfoundland Hospital Association and its laboratory and X-ray technicians and technologists. In the fourth week of the strike, the Government stopped bargaining and instead passed Bill 111, which declared one-third of all laboratory and X-ray technicians and technologists in the province to be essential employees, even though the employees were not providing essential services. Thus the legislation removed the strike as an effective weapon to be used by this group of employees.
4. 555. One year later, the Government introduced wage controls that limited increases for public sector workers when the inflation rate stood at 12 per cent. After one year of controls, the Government decided in November 1983 to extend wage controls for an additional two years.
5. 556. The Government also introduced Bill 59, An Act to Amend the Public Service Collective Bargaining Act, 1973, which was the subject of an ILO complaint in 1984, and which formed part of the Study and Information Mission by the Committee on Freedom of Association to Canada in 1985. The object of Bill 59 was to combat inflation. The Committee concluded that the use of legislation to achieve this end gave the impression that the consultative process had been damaged (see 241st Report (Newfoundland), para. 221).
6. 557. Although the Committee accepted that inflation control was a legitimate function of Government, it stressed the importance of using a short-term process to bring an economic situation under control, rather than putting a more permanent structure into place. The Committee also stressed the importance of consultation when legislation is introduced which alters the balance between the parties (241st Report (Newfoundland), para. 224).
7. 558. As a result of the ILO mission to Canada, the Government committed itself to repealing Bill 59. However, Bill 59 still remains in force and a mere ten months following the mission to Canada, Bill 59 was again used against striking union members in Newfoundland. The President of NAPE was sentenced to four months in jail and to two years' probation after being convicted of violating an anti-picketing injunction. NAPE was fined $110,000 as a result of the 1986 strike.
8. 559. The year 1990 brought more unrest within the Newfoundland public sector. Again the union was fined and its president threatened with being put in jail. Hospital workers, laboratory and X-ray technologists went out on a legal strike, but continued to provide emergency services. After six weeks the employer offered to have the dispute decided at arbitration following which the employees returned to work voluntarily. These employees were awarded a two-year wage and benefit package which was quite favourable. However, the Act eliminates the 12.5 per cent increase which was to be paid to the employees in the second year of the contract and it removes other aspects of the arbitration award, including meal and mileage allowances.
9. 560. When 6,200 hospital support workers went out on strike in 1990, the House of Assembly passed legislation declaring a state of emergency. The legislation provided that the matter would be referred to binding arbitration and ordered the workers to return to work. At arbitration, the suspensions which had been imposed on some of the striking workers were removed and they were awarded a three-year contract. However, the Act eliminates the middle year of the award and thus deprives these workers of the wage and out-of-pocket increases which they were expecting.
10. 561. The complainant submits that the Government is disgruntled with both of these awards in favour of the union and has responded by enacting the Act which was announced shortly after the arbitration award was made. Not only did the Government eliminate over 2,600 positions (or over 13 per cent of all unionised provincial government employees), but it also introduced this Act which allows it totally to disregard all collective agreements previously entered into, and which it had signed in good faith with its employees, and to apply a one-year wage freeze for all public sector workers effective 1 April 1991. Moreover, this legislation allows the Government to renege on its previous commitment to provide retroactivity for pay equity agreements which were negotiated earlier, and by which the Government recognised that the systemic discrimination against women in the workforce needed to be remedied. These agreements were to be effective from 1 April 1988. By disregarding the pay equity agreement, the Act takes away what would have been greatly improved salaries for the women in the public service.
11. 562. The introduction of the Act is motivated by bad faith on the Government's part. Although it agreed that the disputes of the 1990 hospital strike would be decided by an independent third party, it clearly had nothing to lose as it could enact legislation to set aside the arbitrator's award, which it did. Moreover, it attempted to have a non-NAPE bargaining unit agree to ignore the outcome of any legal action that might be taken against the Act. This would appear to indicate that the Government acknowledges that it is on shaky grounds with respect to the constitutionality of the Act.
12. 563. The complainant submits more specifically that the Act violates Articles 3 and 8 of Convention No. 87. By agreeing to binding arbitration and subsequently legislating away the arbitration award, the Government interfered in a way that is contemplated by Article 3(2) of the Convention. Parties which agree on third party intervention ought to be prepared to accept the consequences which flow from the decision.
13. 564. Furthermore, the complainant seriously questions whether the collective agreements were entered into in good faith by the Government/employer. The Committee has referred to the necessity of good faith bargaining and it has pointed out in the past "the importance which it attaches to the principle that both employers and trade unions should bargain in good faith, making every effort to come to an agreement, and particularly when unions are not allowed to have recourse to strike action in the public service or in essential services. The Fact-Finding and Conciliation Commission has emphasised that satisfactory labour relations depend primarily on the attitudes of the parties towards each other and on their mutual confidence." (139th Report (Japan), para. 279.)
14. 565. According to the complainant, it could be argued that it is acceptable for a government/employer to bring its concerns as regards the economic situation to the bargaining table and to ask that this be a consideration when negotiating wages. However, that is not what happened in Newfoundland in 1991. The Government had meetings with some of the unions in a casual, off-handed way, during which it indicated that the province was facing a deficit and that the employer would take any suggestions which the unions could offer to address the deficit position. During these discussions, the Government did not advise the unions that it considered imposing the Act.
15. 566. The President of Treasury Board's office communicated the Government's intentions to upper management personnel of the public service. At this point, it was basically a fait accompli in that it would not have mattered whether the unions submitted a better method to address the deficit or not. The Government quite obviously had in its mind a plan which it perceived as being politically popular rather than a plan which would be in conformity with the ILO position with regard to the consultative process between the parties.
16. 567. The complainant further alleges that the introduction of the Act is an outright disregard for Convention No. 98 which sets out the importance attached to free collective bargaining by the ILO.
17. 568. In addition, by introducing a piece of legislation which disregards previously negotiated agreements, without any alternative dispute resolution mechanism, the Government committed an act of interference, contrary to Article 5 of Convention No. 151. Moreover, Article 7 of the same Convention implies that when faced with issues which affect the province, such as the economic situation, the Government/employer ought to include the bargaining agent in considering solutions.
18. 569. The complainant contends that the balance of the parties is clearly unequal in the public service since, as a legislative body, the employer has the authority simply to legislate away agreements entered into. However, the Committee has previously stated that: "The reservation of budgetary powers to the legislative authority should not have the effect of preventing compliance with collective agreements entered into by, or on behalf of, that public body." (Digest of decisions and principles of the Freedom of Association Committee, 3rd edition, 1985, para. 604.) This disregard for previously negotiated collective agreements, including the pay equity agreements, shows a profound disrespect for the ILO principle of compliance with previously negotiated settlements.
19. 570. Finally, the complainant submits that the Act contravenes Convention No. 154 which further emphasises the ILO's commitment to free collective bargaining.
20. 571. The complainant concludes that the Act is contrary to principles of international labour law and constitutes unfair treatment of the members of NAPE. The complainant has no way of predicting what impact the Act will have on the future salaries of public sector workers in Newfoundland due to the indefinite nature of the Act. In any event, whatever happens in the future, monies lost during the life of the Act cannot ever be recouped. The complainant invites the Committee to request the Government to repeal the Act.
21. 572. In its communication of 31 October 1991, the CLC mentioned that similar complaints were presented concerning five different provinces and requested that they be examined separately. It emphasised however that, in the view of the labour movement and most independent labour relations professionals, labour relations in the public sector in Canada are rapidly deteriorating as governments in Canada are quick to enact legislation which denies or severely restricts collective bargaining in the public sector. It believes that, in order for the ILO Committee on Freedom of Association to obtain an accurate account of the extent of the deterioration of the labour relations climate in Canada, it will be necessary to send its own independent mission to Canada some time during the next several months. It therefore suggests that the Committee strongly consider this as an appropriate option necessary to obtain a full appreciation of concerns related to public sector labour relations in Canada. The CLC reiterated its request in its communication of 6 December 1991, mentioning that a further complaint against back-to-work legislation enacted by the federal Government against its public servants would soon be presented to the Committee. According to the CLC, this means that more than one-half million workers in Canada have had their basic rights denied or severely restricted by federal or provincial legislation.

B. The Government's reply

1. 573. In its communication of 10 April 1992, the Government of Newfoundland denies that the Act is a violation of ILO principles and Conventions or that it is a backlash at public sector unions. Rather, the Act is a fiscally responsible action borne out of economic necessity. Moreover, similar action is also planned for 1992-93 and 1993-94 as the Government is planning to introduce a further restraint act.
2. 574. The Government explains that in the spring of 1991-92, the province's financial health was under some serious constraints which included the following: federal Government equalisation payments to the province were to be reduced; the borrowing capacity of the province was at its maximum; taxation as a source of revenue was not feasible in this province which already had the highest retail sales tax in Canada; and the national recession had caused tax revenues to decline and expenditures to rise.
3. 575. Faced with these constraints, the Government considered many options, including public sector wages, to decrease expenditures and at the same time to ensure that a reasonable level of service be maintained for the population. Salaries and benefits constitute about 55 per cent of total government spending on programmes and services and for every 1 per cent increase in salaries, an addition $11.5 million would be required. In light of the constraints outlined above, the Government could not justify an expense of the magnitude called for by collective agreements which would be in the vicinity of $60 million.
4. 576. While introduction of the Act was one of the restraint measures undertaken, there were a number of other measures introduced (as outlined in the Budget Speech for 1991-92 and provided by the Government in an Annex). Of particular note among them is the elimination of 2,500 positions. Compliance with collective agreements would have required the lay-off of an additional 1,600 positions which could not have been accomplished without seriously impeding the delivery of critical services.
5. 577. The Government explains that collective bargaining in the public sector of Newfoundland has been ongoing since the early 1970s and that although there have been highs and lows during this period, there has also been a cooperative effort to solve difficult labour relations issues. The introduction of the Act was therefore not an easy decision to make; it was a necessary measure for the good of the province. Further economic problems have forced the Government to introduce new legislation to cancel all negotiated compensation increases, provide no compensation increases again for 1992-93 and a maximum of 3 per cent total compensation increases for 1993-94. The Government asserts that the time-frame associated with the legislation is very defined and of the shortest duration possible.
6. 578. Moreover, the Act was not designed to punish public sector unions in any way, since it applies not only to unionised groups, but also to non-union groups including managers, executives, cabinet ministers and members of the House of Assembly. In fact, the effect of that legislation goes beyond the public sector, into areas that receive government funding and into areas that do not.
7. 579. The Government contends that the Act is an exceptional measure since only once before, in 1984-85, was a freeze on salaries imposed in the public sector. In addition, the Act does not suspend collective bargaining. It merely removes the right to bargain on monetary matters. Unions still have the right to bargain on all non-monetary issues and in this regard several unions, including NAPE, continued negotiations on their contracts and reached settlements after the passage of the Act. Moreoever, the Act does not endanger the living standards of employees. An incremental structure exists in the majority of civil service compensation plans through which employees receive increases in accordance with their length of service. These increases have not been affected by the Act.
8. 580. The suggestion that the Act was solely a reaction to an unpopular arbitration award is unfounded and completely ignores the financial context within which the Government had to operate. The Government did bargain in good faith. The arbitrated settlements of the fall of 1990 were embodied in collective agreements and the wages were paid for the first year of the three-year contracts. Similarly all other provisions of the contracts were and are being observed. It was not until the spring of 1991 that the economic realities began to reveal themselves as a bona fide fiscal crisis. It is true that bargaining on other contracts embodying salary increases continued just before and even after the introduction of the Act. However, by then, both parties knew of the legislative restrictions and adjusted the wording in the individual contracts to reflect that knowledge.
9. 581. The Government states that the Hansard record of the debate of the Act in the Newfoundland House of Assembly (attached to the complainant's Statement of Evidence) provides an accurate depiction of the Government's view on the degree and substance of communication with the unions prior to the enactment of Bill 16. There is no doubt that unions were consulted and that the seriousness of the situation was conveyed to them. However, they refused to believe the importance and severity of the situation.
10. 582. Furthermore, the Government has demonstrated a commitment to pay equity in the public sector by being one of the first public sector employers in Canada freely to bargain a pay equity agreement with the unions. Most other Canadian jurisdictions have legislated pay equity into their system, or have not addressed systemic wage discrimination at all. However, the problems with pay equity stem from an inability of the parties to agree on the ratings and relative worth of positions. The rating process had been ongoing for several years with the result that an implementation liability occurred to the order of $24 million. In the Government's view, it did not make sense to pay the $24 million to certain workers and then eliminate 900 jobs to pay for the implementation. The Act does not eliminate pay equity but only removes the retroactive liability component of the programme. Moreover, since the introduction of the Act, the parties have reconvened the ratings committees and their deliberations have been considerably more productive. The elimination of retroactivity has created an urgency that has benefited the pay equity programme in general. Pay equity payments have already commenced for the first health care group.
11. 583. The Government finally argues that ILO principles and Conventions recognise that governments must be given the flexibility to deal with economic crises. It states that the Committee has in the past concluded that: "If, as part of its stabilisation 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 is necessary, without exceeding a reasonable period, and it should be accompanied by adequate safeguards to protect workers' living standards." (Digest, para. 641.)
12. 584. The Government had hoped that the Act could be a short-term solution to a short-term recessionary problem. However, the recession has continued and is forecast to continue much longer than originally expected. Therefore, the Government has been forced to adopt a longer-term solution and has announced in its Budget Speech of 1992 its intention to introduce further wage restraint legislation. The Government concludes that the Act and subsequent wage restraint legislation are totally necessary and justifiable measures which, while they do restrict collective bargaining on monetary issues only, do so entirely in accordance with ILO principles and Conventions.

C. The Committee's conclusions

1. 585. The Committee notes that this case involves restrictions on collective bargaining for public sector workers in the Province of Newfoundland (Canada), and the cancellation of increases already negotiated by the bargaining agents on their behalf. The Government submits in substance that this intervention was and remains necessary in view of the difficult fiscal and economic situation of the province.
2. 586. Before turning to the merits of the complaint, the Committee refers to the comments it made in this report in relation to Case No. 1616 (Canada), as regards the general context in which this complaint was presented, and its views on economic arguments as a justification for restricting collective bargaining, which apply equally here with appropriate modifications.
3. 587. The Committee has acknowledged that where, for compelling reasons of national economic interest and as part of its stabilisation policy, a government considers that it is not possible for wage rates to be fixed freely through collective bargaining, any restrictions should be imposed as an exceptional measure and only to the extent that is necessary without exceeding a reasonable period, and should be accompanied by adequate safeguards to protect workers' living standards. (Digest, para. 641.) The Committee of Experts has adopted a similar approach on this issue (General Survey on Freedom of Association and Collective Bargaining, 1983, para. 315.)
4. 588. As regards the particulars of the present case, the Committee notes that there exist several factors which, added together, distinguish it from other similar complaints against the federal or provincial governments of Canada.
5. 589. As regards the history of collective bargaining in Newfoundland, the Committee finds it difficult to understand the Government's statement that the Act is an exceptional measure and that collective bargaining has been conducted in the normal fashion on all labour relations issues since 1973. Based on the brief chronology of events explained by the complainant, and also on the findings by the Study and Information Mission to Canada in 1985 in the context of Case No. 1260 concerning Newfoundland, the bargaining relationship in the public service can hardly be considered as normal. The Committee feels bound to note that repeated recourse to such legislative restrictions can only, in the long term, prejudice and destabilise the labour relations climate, if the legislator frequently intervenes to suspend or terminate the exercise of rights recognised for unions and their members. Moreover, this may have a detrimental effect on workers' interests in unionisation since members and potential members could consider useless joining an organisation the main objective of which is to represent its members in collective bargaining, if the results of such bargaining are constantly cancelled by law.
6. 590. Secondly, the Act under consideration here cancels all negotiated compensation increases in the public sector, whereas the impugned legislations in the other cases delayed the negotiated increases by one year and two years respectively. In addition, the Act eliminates the retroactivity in pay equity agreements.
7. 591. Thirdly, the Committee notes from the Government's own observations that, while the wage restraint measure was initially planned for one year only, ending on 31 March 1992, similar legislation has been introduced to cancel all negotiated compensation increases, provide no compensation increases for fiscal year 1992-93 and 3 per cent maximum increase in fiscal year 1993-94. The Government states that this additional intervention was rendered necessary by further economic problems and that the restraint is confined to a limited time frame. While the Committee has not been informed as to whether the above-mentioned legislation has in fact been enacted, it considers that the measures announced in the 1992 Budget Speech confirm the concerns of the complainant as to the indefinite nature of the wage restraint legislation, which could in this way be extended on a yearly basis.
8. 592. The complainant states that the wage restraint legislation was introduced without consultation, whereas the Government asserts that it consulted with trade unions to inform them of the serious economic situation and collect suggestions. In view of this contradiction, the Committee will only recall the final remarks made on this subject in the 1985 Report of the Study and Information Mission to Canada: "... such consultation is doubly important where the Government seeks to alter bargaining structures in which it acts actually or indirectly as employer. Time available for consultation must be adequate. Obviously, it may be limited by the urgency of action in face of economic problems. Its effectiveness can be reduced by the attitude taken by the trade unions concerned. But it is a truism that proposals should be openly discussed, clarified and doubts, fears and misunderstandings resolved before legislation takes its final form". (241st Report, para. 224.)
9. 593. For all the above-mentioned reasons, the Committee considers that the Public Sector Restraint Act, 1991 went beyond what it has previously considered to be normally acceptable limits that might be placed temporarily on collective bargaining, as it cancelled previously negotiated agreements and in so far as the Government has expressed its intention to extend the initial one-year period of wage restraint by enacting further legislation. It invites the Government to resume wide and constructive consultations with the trade unions concerned with a view to restoring free collective bargaining in accordance with freedom of association principles.

ANNEX

1. Extracts of the Public Sector Restraint Act
2. ...
3. Definitions
4. 2. In this Act
5. (a) "collective agreement" means an agreement in writing entered into between
6. a public sector employer and a bargaining agent containing provisions
7. respecting pay scales and working conditions for public sector employees and
8. includes an arbitration award and an adjudication judgement;
9. (b) "pay scales" means pay scales and other monetary benefits paid or
10. provided, directly or indirectly, by or on behalf of a public sector employer
11. to or for the benefit of a public sector employee, and includes the monetary
12. benefits contained in the Labrador Benefits Agreement between the Crown and
13. various parties signed on May 7, 1990;
14. (c) "public sector employee" means every person employed by:
15. (i) the government of the province,
16. (ii) a Crown agency, board, commission, authority or other body of the Crown
17. funded in whole or in part from money voted from time to time by the
18. Legislature, but does not include a municipality or city in the province,
19. (iii) a corporation in which not less than 90 per cent of all the issued
20. common shares are owned by the Crown in right of the province,
21. (iv) a corporation established by an Act under which the corporation is made
22. an agent of the Crown in right of the province,
23. (v) a corporation, body or authority managing a hospital, included in the
24. Schedule to The Hospitals Act, 1971,
25. (vi) the Memorial University of Newfoundland and any agency, board, commission
26. or other body funded or owned by the University,
27. (vii) a provincial institute established or continued under The Provincial
28. Institutes Act,
29. (viii) a community college established under The Community Colleges Act,
30. (ix) an employer to which The Public Service (Collective Bargaining) Act, 1973
31. applies,
32. (x) a denominational education council referred to in The Department of
33. Education Act, 1990,
34. (xi) a school tax authority appointed under The Local School Tax Act,
35. (xii) a school board or a group of school boards constituted by or under or
36. continued by The Schools Act, including every teacher to whom The Newfoundland
37. Teacher (Collective Bargaining) Act, 1973 applies, and
38. ...
39. (e) "restraint period" means the fiscal year beginning on April 1, 1991 and
40. ending on March 31, 1992.
41. ...
42. No increase in compensation
43. 5. (1) Notwithstanding the terms and conditions of employment whether under a
44. collective agreement, other contractual arrangement respecting employment or
45. otherwise, no increase shall be applied to the pay scales of public sector
46. employees during the restraint period.
47. (2) Where there is a provision in a collective agreement or other contractual
48. arrangement respecting employment which provides that pay scales applicable
49. during the restraint period are higher than those pay scales in effect on
50. March 31, 1991, that provision is void.
51. (3) Where a collective agreement or other contractual arrangement respecting
52. employment provides for increases in pay scales after the restraint period,
53. the pay scales shall be reduced as a consequence of this section and the 1st
54. increase shall be applied to those pay scales in effect on March 31, 1991 and
55. each subsequent increase shall be applied to the recalculated pay scales in
56. effect immediately prior to the date the subsequent increase is scheduled to
57. take effect.
58. Extension of collective agreements
59. 6. (1) Notwithstanding section 5, the bargaining agent of public sector
60. employees who are subject to a collective agreement in force on April 1, 1991,
61. may elect to extend the collective agreement for 1 year beyond the expiry date
62. set out in the collective agreement with the pay scales which but for this Act
63. would have taken effect after March 31, 1991 to have effect 1 year later than
64. the scheduled date set out in the collective agreement.
65. (2) Notwithstanding the terms and conditions of a collective agreement, no
66. increase shall be applied during the restraint period to the pay scales of
67. public sector employees whose bargaining agent has elected to extend the
68. collective agreement under subsection (1).
69. ...
70. Arbitration awards
71. 8. Notwithstanding another Act, where the Lieutenant-Governor in Council
72. determines that an arbitration award or adjudication judgement is made in
73. contemplation of or to compensate for the restraint period even where there
74. are no compensation increases during the restraint period, the
75. Lieutenant-Governor in Council may set aside or modify that award or judgement
76. in order to comply with the intent and purpose of this Act.
77. Pay equity
78. 9. (1) Notwithstanding the terms and conditions of a pay equity agreement
79. contained in a collective agreement or added by agreement to an existing
80. collective agreement, no pay equity agreement shall contain a provision which
81. implements that pay equity agreement retroactively.
82. (2) Where there is a provision in a pay equity agreement which provides that
83. the pay equity agreement shall be implemented retroactively, that provision is
84. void.
85. (3) Notwithstanding the other provisions of this Act, a pay equity agreement
86. may be negotiated or implemented, but the 1st pay equity wage adjustment date
87. shall be the date on which the pay equity wage adjustment is agreed upon.
88. (4) This section applies whether the pay equity agreement is reached or the
89. pay equity wage adjustment date is agreed upon before or after the date this
90. Act comes into force.
91. (5) In this section "pay equity agreement" means an agreement between a public
92. sector employer and a group of public sector employees to recognize the
93. compensation practice which is based primarily on the relative value of the
94. work performed, irrespective of the gender of employees, and includes a
95. requirement that no employer shall establish or maintain a difference between
96. compensation paid to male and female employees, employed by that employer, who
97. are performing work of equal or comparable value.
98. Commencement
99. 10. This Act is deemed to have come into force on March 31, 1991.