Digest of Benefit Entitlement Principles Chapter 8 - Section 11

8.11.0 Termination of the stoppage of work

The termination of a stoppage of work is not an isolated event which suddenly occurs by chance. Rather, this event is collectively resolved and brings the stoppage of work to an end (Digest 8.4.0 to 8.4.3).

There are regulations in place prescribing the circumstances that must exist in order for the stoppage of work to be considered ended. EI Regulation 53(1) states:

“… a stoppage of work at a factory, workshop or other premises is terminated when

1. the work-force at the factory, workshop or other premises attains at least 85 per cent of its normal level; and
2. the level of activity in respect of the production of goods or services at the factory, workshop or other premises attains at least 85 per cent of its normal level.”

The termination of the stoppage of work has occurred when two indicators have been met; that is, the number of the work force, and the activities related to the production of goods and services have returned to 85% of normal levels.

This 85% minimum is a rigid benchmark between the continuation of the stoppage of work and the end of the stoppage, which occurs when this minimum is attained. The 85% minimum must be obtained in both indicators. Without it, it cannot be concluded that the stoppage of work has terminated. For example, if the work force equals or surpasses the normal level by 85%, but not the activities related to the production of goods and services, the stoppage of work has not ended (Digest 8.4.2). Regarding the production of goods and services, a minimum of 85% must be met in both quantity and quality.

The determination that the stoppage of work has ended is one of the two factors that permits the termination of the disentitlement (EI Act 36(1)). The question is whether the stoppage of work has come to an end with regard to the business as a whole, or, if the labour dispute was more limited in its impact, with regard simply to those operations or group of workers affected by the dispute (Digest 8.4.1).

Termination of the stoppage of work does not necessarily mean that the dispute has come to an end. Just like the fact that the dispute may be settled does not mean the stoppage of work is immediately terminated. It would be quite unusual for these two events to occur at the same time (Digest 8.11.2).

Although a sole dispute could stop activities at several places of employment, the determination of when the stoppage of work terminates must be considered separately for each of these locations. The termination of the stoppage of work could therefore occur at different dates because of the actual situation existing at each of these places.

Finally, it must be remembered that the 85% minimum must be calculated on the basis of what constitutes the normal level of the work force and the activities related to the production of goods and services. In many cases it is not easy to determine the normal level which corresponds to each of these indicators.

8.11.1 Normal situation

The regulation provides that the stoppage of work terminates when the work force and the activities related to the production of goods and services represent at least 85% of their normal level (EI Regulation 53).

What constitutes the normal situation for these two indicators corresponds to the situation which would normally have existed, had it not been for the stoppage of work. Generally, the number of employees and the level of activities that existed before the stoppage of work is a good indicator of what the normal situation would have been. The level of production that had been attained due to overtime operations could also qualify as being normal. The normal situation is not, however, when the work force and the level of activities were attained because of exceptional or temporary measures taken by the employer, to lessen the effects of the labour dispute situation. The normal situation would be determined after discounting these measures (Digest 8.11.6).

The normal situation evolves from one moment to another and could result from the differing number of employees and level of activities during this time. It is necessary to consider fluctuations in production, if these normally occur during the course of the year. Contracts that the business would have normally obtained or achieved, if not for the stoppage of work and the dispute, are also factors to consider.

The situation as it existed before the stoppage of work could also be attributed to factors related to the labour dispute, and the potential stoppage of work. The situation would be considered normal if changes to the work force or the level of activities prior to the stoppage of work, whether reduced or increased, can be explained by factors not relevant to the dispute. These factors could include the economic climate, competition reduced or increased by competitors, or, active or seasonal shutdowns.

However, when factors are related to the dispute and potential stoppage of work and are causing a reduction or increase in the work force or level of activities, it is not considered when determining the normal situation. The normal situation would correspond to one that would normally have existed in the absence of these factors.

Sometimes circumstances could occur during the course of the stoppage of work, or at the resumption of activities, and have a bearing on the normal situation (Digest 8.11.2 to 8.11.5). Some of these may be related to the dispute and the stoppage of work, while others may not; some may permanently modify the normal situation, and others, only temporarily.

8.11.2 Settlement of dispute, resumption of activities

There is no absolute rule that says the settlement of the dispute is conditional on the resumption of activities. The parties could agree to resume activities even if there is no immediate apparent solution to the dispute or they could be prevented from resuming activities where no settlement has been reached. This does not mean that the number of employees at work and the activities related to the production of goods and services will instantly attain the levels equivalent to the normal situation (Digest 8.11.1).

In the vast majority of cases, the resumption of work is a gradual process, governed by a back-to-work agreement and the business' requirements. It is quite likely that only those workers who are needed to perform the preliminary tasks in preparation for the resumption of normal business activities, will initially be recalled, for example, to start up the machinery or repair equipment. This situation may also apply to a small group of employees who may be recalled one or more weeks before the majority of the workers affected by the labour dispute. Whatever the case may be, this does not by itself result in the termination of the disentitlement for those recalled, unless, when resuming employment, the claimant effectively holds the same job that was held before the stoppage of work occurred (Digest 8.12.0).

The settlement of the dispute has little bearing on the disentitlement. It is the termination of the stoppage of work which is the deciding factor and which permits the termination of the disentitlement (EI Regulation 53; FCA A-1063-87; CUB 69099C). The question is not whether the claimant is still involved in the dispute, but whether the claimant continues to be involved in a stoppage of work attributable to that dispute.

Even when a labour dispute has been settled, it likely leaves an impact which continues to affect the normal course of the activities of a business for some time. This may be the case, regardless of the impact of other factors unrelated to the dispute, which can also delay the resumption of activities. The causal relationship between the dispute that has been settled, and the stoppage of work that continues, should not be based merely on speculation. The period of time between the settlement of the dispute and the termination of the stoppage of work must be a natural consequence of the dispute. If it is not, facts must be obtained before concluding that there is a causal relationship between the past dispute and the continuing stoppage of work.

It may also happen, once the dispute is settled, that another unrelated cause arises and becomes solely responsible for prolonging the duration of the stoppage of work. It then becomes necessary to determine the point at which the stoppage ceases to be directly attributable to the dispute and when another stage begins; that is, due to another cause.

Obviously, in this context, it is in the interest of claimants and unions to minimize the impact of the conflict in explaining the delay in resuming the course of normal activities, or to introduce other causes that are minimally or entirely unrelated to the dispute (Digest 8.4.3). Regardless of this, each of the parties must be given the opportunity to state their case and be assessed fairly and objectively, in order to determine whether the resumption was delayed or prevented in some way, as a result of the dispute.

Once the dispute is settled, it is often difficult, depending on the sector involved, to resume normal activities as if nothing had happened, to secure new orders, or to recover lost clients. Such considerations may be sufficient to show relative continuity in the relationship between the dispute and the stoppage of work.

The continuing stoppage is obviously due to the dispute if it results from damages caused by the dispute or closure of the premises, unless the employer does not take immediate steps to put the machinery in working order. A delay due to the employer's intentions to restructure the staff or to proceed with renovations, is not attributable to the dispute.

Other circumstances could also prevent the attainment of the 85% minimum. A regulatory provision specifies at what time the stoppage of work terminates in those circumstances (EI Regulation 53(2); and Digest 8.11.3).

8.11.3 Circumstances preventing attainment of 85%

A business where a stoppage of work due to a labour dispute occurred may be impacted by many circumstances when the dispute is resolved. For the most part, these circumstances are related to the dispute and the stoppage of work. Other circumstances, specific to the business or a sector of the economy, that are unrelated to the dispute and the stoppage of work, could also occur, which would have an impact on the work force and business activities.

The effects of these circumstances on the number of workers and the level of activities could be minimal or significant, temporary or long term, and in the latter case, may be felt beyond the settlement of the dispute and the subsequent resumption of activities (Digest 8.11.2).

Whatever the situation, generally, the fact that these circumstances occur during the course of a stoppage of work and impact the normal situation of a business, does not change the relationship between the cause and effect linking the initial stoppage of work to the dispute (FCA A-181-83, CUB 7842; and FCA A-270-91, CUB 19037).

Among these circumstances there are some which will always be considered in light of the regulation dealing with when the stoppage of work terminates. Here is an extract of EI Regulation 53(2):
“Where, in respect of a stoppage of work, an occurrence prevents the attainment of at least 85 per cent of the normal level of the work-force or activity in respect of the production of goods or services at a factory, workshop or other premises, the stoppage of work terminates:

1. if the occurrence is a discontinuance of business, a permanent restructuring of activity or an act of God, when the level of the work-force or of the activity attains at least 85 per cent of that normal level, with the normal level adjusted by taking that occurrence into account; and
2. if the occurrence is a change in economic or market conditions or in technology, when
   1. there is a resumption of activity at the factory, workshop or other premises, and
   2. the level of the work-force and of the activity attains at least 85 percent of that normal level as adjusted by taking that occurrence into account.”

These prescribed circumstances share the common fact that they happen during the course of the labour dispute and they prevent the attainment of a minimum of 85% of the normal level. Moreover, it must be noted that these circumstances modify, at least for an indefinite period, the normal situation of the business or the specific operation of the business affected by the stoppage of work. It is logical, therefore, to adjust what would constitute the normal situation for the two indicators. It is then against the adjusted level that a determination would be made as to whether the 85% minimum has been attained.

These circumstances do not have to have a great impact on the two indicators. It is sufficient that they prevent the attainment of 85%. For example, it is relevant if a circumstance results in reducing the work force or activities by 10%, which could be just the amount that is needed to attain a minimum of 85% of the normal level.

Finally it is important to keep in mind that any exceptional or temporary measures taken by the employer for the purpose of offsetting the effects of the stoppage of work must not be taken into consideration (EI Regulation 53(2); and Digest 8.11.6).

8.11.4 Discontinuance of business, permanent restructuring, act of God

A stoppage of work which has dragged on, may, in many cases, be the trigger which causes the employer to take or forestall certain decisions in respect of the future of the business, or an activity which was particularly impacted by the stoppage. Whatever the motives, an employer could, during the stoppage of work, declare bankruptcy, proceed to sell the business, transfer the activities elsewhere, or restructure.

As well, a business is not sheltered from an act of God such as fire, an explosion, or a natural catastrophe like an earthquake, mud slide, tornado or flood, which may irreparably affect what would have been the normal situation, had there not been a stoppage of work.

The regulations provide for a particular treatment in the case of a discontinuance of business, permanent restructuring, or an act of God where such circumstances prevent the attainment of 85% of the normal activities for the two indicators (EI Regulation 53(2)). These circumstances will not be considered if they don't affect these two indicators, or they only affect activities not implicated in the stoppage of work. Except when it concerns the discontinuance of business, it is at the time activities resume that these circumstances could apply. It is important that these circumstances become concrete and, in the long term, permanently modify the normal situation (Digest 8.11.1) of the business or activity impacted by the stoppage of work. They must not simply be projections or probabilities, or form part of a statement of intentions or strategies used to force negotiations.

It is important to analyze the pertinent facts beyond the mere intentions, statements or any action on the employer's part (CUB 46110, CUB 24335, FCA A-38-96, CUB 31276). For example, the negotiations should be examined as to whether they have broken off, whether there is no further dialogue, operations have been transferred, assets liquidated, notice of closure sent to the Department of Labour, payment of amounts due on final closure, etc. Such actions may be an indication as to whether the action is intended merely to intimidate or counter an uncompromising union.

It may happen that workers receive a letter informing them that their employment will end at such a date, if they do not return to work (FCA A-814-91; CUB 20138), or that the business will close if the offer is rejected. Such notices do not necessarily signify that the employer has closed the business, even when accumulated leave credits or reimbursements of pension contributions have been paid. It may be a tactic to incite the workers to return to work.

The sale or cessation of parts of the business will not necessarily put an end to the dispute or to the stoppage of work (CUB 21211). The dispute and stoppage could continue, even if there is a new buyer. Generally, the new buyer must recognize the present union, and respect the agreements and contracts previously signed. Selling all or part of the business may, however, lead to a permanent restructuring of activities.

An employer could proceed with a temporary restructuring of activities in order to maintain essential services, until a solution is found to the dispute. This is not what permanent restructuring means. Such exceptional or temporary measures must not be included in the consideration of adjusting what would constitute a normal situation (Digest 8.11.6). Neither could they be used in the calculation of the 85% minimum (EI Regulation 53(3)).

It must be a true and long-term restructuring of the group of workers or of the activities affected by the stoppage of work (FCA A-38-96, CUB 31276) and not just a shift of roles or a minor change in duties. Nor does this apply to the regular restructuring between the active season and the off-season (Digest 8.11.5).

In order to consider the effects of a permanent restructuring of activities which could arise because of changes in the economic conditions or market, or result from technological change, at least some level of resumption of activities would be necessary (EI Regulation 53(2)).

In conclusion, when a prescribed circumstance prevents the attainment of a minimum of 85% of the normal situation, a new calculation will be made. The intent is to see whether the number of employees at work, and the production activities, attain at least 85%, having adjusted the normal situation as a result of these new circumstances. In other words, the decline in the number of employees and in the activities that are attributable to these circumstances would be subtracted from the normal situation.

8.11.5 Changes due to technology, economic or market conditions

When there is a resumption of activities and there are changes due to technology or in economic or market conditions, these may prevent the attainment of a minimum of 85% of the normal level in the two indicators previously mentioned (EI Regulation 53(2)(b)) and Digest 8.11.3). In this case a new calculation is provided to determine whether the minimum of 85% is attained, but this time, taking into account these changes on the normal level. This element is critical as it determines when the stoppage of work terminates (Digest 8.11.1).

In many cases, these technological or economical changes are not solely occurring at the business where the stoppage of work occurred, however they nonetheless have a bearing on determining the situation that would have been normal. Most of the time, the impact is on a sector of activities which the business is part of, or even on the whole economy, for example, computerization, automation, free trade, quota reduction, high interest rates, dollar exchange, or a decline in market demand for products or services, etc.

These changes may occur in a cycle of transformation, technological progress, rationalization of activities, international trade, economic growth or recession, or market evolution. They will have a bearing on the activities of a whole group of businesses and transform these businesses from their normal situation for an undetermined period, if not forever.

It is only when activities impacted by the stoppage resume, that we must determine whether these changes prevent the attainment of a minimum of 85% of the normal level for each indicator (EI Regulation 53(2)(b)(i)).

Where the regular off-season in the sector of activities of which the business is a part, originates from the conditions of the economy or market, this does not properly lead to a finding of a change from the normal situation. These are annually recurring conditions and the levels reflect the normal situation which, at that time, has already taken into account the conditions of the economy or market tied to the off-season. Therefore there will not be any adjustment to the levels if the parties come to an agreement about the labour dispute, during the off-season (Digest 8.11.8).

Changes due to technology or in the conditions of the economy or market that result in a permanent restructuring of the activities of a business are not relevant unless there has been some resumption of activities (EI Regulation 53(2)(a)) and Digest 8.11.4). At that point, these circumstances could have a significant bearing on the termination of the stoppage of work.

Supposing that at the resumption of activities, the changes in technology or in the conditions of the economy or market lead to a reduction of 10% of the work force and the business' activities, to the point where the 85% minimum of the 100 employees normally at work and the 1000 units normally produced each day, cannot be attained. The regulatory text (EI Regulation 53(2)) provides that the minimum of 85% which determines the termination of the stoppage of work must be recalculated but this time, on the basis of 90 employees and 900 units of production, which constitute the normal level, adjusted because of the changes at the business.

8.11.6 Exceptional or temporary measures

As we have seen, what constitutes the normal situation of a business corresponds to the levels of the work force and activities which would normally have existed, had it not been for the dispute and the stoppage of work (Digest 8.11.1). These levels have nothing to do with what would have been obtained because of exceptional or temporary measures taken by the employer to increase activities. For example, the employer may increase the capacity of production or the quantity of stored products, or, delay certain contracts, in anticipation of the stoppage of work, or to lessen its effects.

An employer may, for a temporary period, give priority to certain tasks and in doing so, drop others that are less useful, or use other employees, even strikebreakers, to maintain essential services.

The fact that the employer has taken steps to maintain the firm's production, or that of a more limited group of workers, at a normal level, does not necessarily mean there has been no stoppage of work. As a general rule, there is a stoppage of work when an employer maintains operations with the help of exceptional or temporary measures, no matter how successful these measures may be (FCA A-340-79, CUB 5266B, FCA A-143-80, CUB 5869 and FCA A-556-91, CUB 19727).

Oftentimes, such measures have a detrimental impact on the work, which must be performed elsewhere, and thus disrupts the operations of the firm as a whole. Temporarily abandoning office and maintenance work for strictly production work constitutes a stoppage of work in sectors other than production (CUB 21211); whatever the level of production, there is a stoppage of work if the interruption of operations in other sectors is relatively significant.

It is important to know which of the measures used by the employer will become permanent, whether strikers will return to work once the dispute is settled, and whether they have actually returned to work.

In order to determine the permanent or temporary nature of the measures taken by the employer, consideration must be given to:

• the volume of operations affected
• the number of employees on strike,
• the number and type of replacement workers, and whether the replacement workers are permanent or temporary (Digest 8.11.7),
• the hours worked are normal, or the operations are performed at the expense of other operations, such as maintenance or repairs,
• the importance of the neglected operations, and
• whether the link between employer and employees is permanently broken (Digest 8.13.0).

To authorize payment of EI benefits to strikers simply because the employer has managed to restart and maintain operations through exceptional measures would be to violate the very purpose of the legislative provisions dealing with labour disputes, and create a major source of inequity.

This is particularly true when the dispute affects only a small number of workers, and where the employer's measures succeed in preventing the stoppage of work. It is hard to claim that a stoppage of work has taken place when a strike by some employees has no significant impact on ongoing operations.

The employer could also take exceptional and temporary measures at the resumption of activities in order to compensate for the effect of the stoppage of work. These measures are not to be taken into account when calculating the 85% minimum (EI Regulation 53(3)) and Digest 8.11.3 to 8.11.5).

8.11.7 New employees permanently hired

It must be remembered that, the fact that prior to or following a stoppage of work attributable to a labour dispute, an employer succeeded in resuming or substantially maintaining activities by exceptional or temporary measures, is not sufficient to conclude that a stoppage did not occur or has terminated.

A stoppage of work may nevertheless terminate with the return to normal operations using regular, permanent means, although this does not exclude the possibility that some means considered temporary may after a time become permanent (FCA A-143-80, CUB 5869 and FCA A-556-91, CUB 19727).

The termination of a stoppage of work does not necessarily imply that the regular employees return to their work; the employer may, for example, have hired replacement workers that lead to a resumption of operations (FCA A-38-96, CUB 31276). The issue then becomes focused on the permanent or provisional nature of the action taken by the employer.

Radical positions are taken from time to time, particularly in highly contested disputes. For example, an employer may permanently dismiss the striking employees and hire replacement workers, describing them as permanent employees. Such action should normally be viewed in the context of an overall reactive strategy to wear down, discredit and intimidate, in order to force a favourable solution to the dispute, and to remove radical elements. They generally constitute exceptional or temporary measures that should not be taken into account when calculating the 85% minimum (EI Regulation 53(3) and Digest 8.11.6).

8.11.8 Shutdown during the off-season

This is not a question of seasonal termination of employment of a sole individual (Digest 8.13.0 to 8.13.5), but rather the termination of the whole workforce of a firm or of a particular field of activity due to a shutdown during the off-season; for example, maritime transportation on navigable waterways during winter, agriculture or some kind of leisure activities specific to some seasons.

The off-season is associated with a period of the year where there is a reduced volume of activity in a sector of the economy. It is often expected to last a fairly long period, a season if not more. It will recur year after year, at a relatively fixed period of time, which for all practical purposes excludes any shutdown that would be only occasional or of a short duration.

The question here is whether all workers who lost their employment due to a work stoppage attributable to a labour dispute, before the beginning of the off-season, will remain disentitled to benefits for the duration of the off-season. This is particularly important when the off-season lasts from three to six months (depending on the type of business and activities).

At one time it was held that the disentitlement could be terminated as of the date the claimant could prove that, in the absence of the labour dispute, the claimant would not have been able to work, which is the case in a seasonal shutdown. This line of thinking appears contrary to the text of the legislation, which limits the termination of the disentitlement to one of only two circumstances (EI Act 36(1)(a) and (b)). It is not possible to interpret any of these two paragraphs as signifying that the disentitlement ends when the labour dispute ceases to be the real cause of the unemployment (FCA A-181-83, CUB 7842).

The final resolution rests on the reasons for the claimant's loss of employment at the time they became unemployed, more so than reasons that arise during the work stoppage, regardless of whether it is a seasonal shutdown, or a vacation period during Christmas or during the summer (FCA A-559-89, CUB 6831). The question is approached differently if, in a given case, there is a complete and definitive severance of the employer-employee relationship (Digest 8.13.0), or where the conditions of non-application, as provided in the exempting clause of the labour dispute provisions, are fulfilled.

A good example would be the teaching field. To determine whether benefits are payable to a teacher during the non-teaching period, we must consider if the claimant has continuity of employment. If they do, then the employer/employee relationship has not ceased and they are generally not entitled to benefits during the non-teaching period. If there is a work stoppage attributable to a labour dispute, the appropriate disentitlement will also be imposed. If the labour dispute continues into the teaching period, then they are still subject to disentitlement as they are still involved in the labour dispute by virtue of their vested interest in the outcome of the labour dispute.

If their contract has terminated thereby proving they no longer have continuity of employment the disentitlement would not apply after the end date of the contract, as long as the claimant is not participating in, financing or directly interested in the labour dispute (CUB 26330).

Finally, the stoppage of work may be considered to have come to an end when the settlement of the dispute occurs during the off-season, even if in fact the resumption of activities only occurs many months later (EI Regulation 53(1) and Digest 8.11.5). Attainment of the 85% minimum may be easily reached when calculated on the basis of a normal situation which represents a reduced, if not virtually nil level of work force and activities.

[April 2019]