What we heard: Prohibiting replacement workers in federally regulated industries and improving the maintenance of activities process under the Canada Labour Code

Impact of replacement workers

Unions who participated in the consultations all believed that the use of replacement workers should not be allowed. These stakeholders highlighted three key concerns with allowing employers to use replacement workers, arguing that using replacement workers:

• violates workers’ right to strike and causes imbalance in collective bargaining;
• creates tensions on picket lines and in the workplace; and
• threatens workplace safety as well as public safety.

Unions stressed that the right to strike is protected by the Canadian Charter of Rights and Freedoms and the International Labour Organization (ILO) Convention 87 (Freedom of Association and Protection of the Right to Organise)^{Footnote 6}. Stakeholders quoted the ILO’s Committee of Experts on the Application of Conventions and Recommendations which has said that replacing striking workers may violate their right to strike.

“The right of workers to withhold their labour in order to achieve common goals in their workplace is the foundation of the trade union movement, essential to meaningful collective bargaining, and a fundamental right in our democratic society.”

Balance was also a key issue. Unions told us that employers always have the upper hand in negotiations because they have much more financial power than workers. They stressed that allowing replacement workers makes this imbalance worse by weakening workers’ main tool to exert pressure – the right to strike. Some argued that some employers may use replacement workers as an option to avoid making compromises. They believed that this imbalance of power leads to difficult bargaining processes and makes strikes and lockouts longer.

Unions also argued that when an employer brings in replacement workers, it increases the risk of picket line violence. To prove their point, some unions listed incidents in the past few decades where the use of replacement workers led to conflicts on picket lines. The majority of union stakeholders stated that employers’ use of replacement workers has significant negative impact on labour relations.

Some representatives in a roundtable session raised safety concerns. They said that replacement workers aren’t as well trained as union members. They argued that training is particularly important in critical industries like railways. Some written submissions expressed similar concerns. They suggested that using unqualified replacement workers can result in defective products that lead to public safety issues.

“Recent cases illustrate that accidents can occur when the employer uses scabs. Often, they do not have the training, skills and experience required to carry out the tasks of people on sick leave. In addition, they are often called upon to work long hours, sometimes leading to overwork. Inexperience combined with fatigue increases the chances of incidents or even more serious work accidents that can even put the health and safety of the population at risk.”

In contrast, employers argued that Part I of the Code currently sets the right balance of powers between employers and unions. Several employers pointed to the Sims Report of 1996 that recommended the current limited ban on the use of replacement workers.

In 1995, the then Minister of Labour tasked three respected experts in federal labour law with a wholesale review of Part I of the Code. The experts, headed by Andrew Sims, summarized the results of the review and submitted the Sims Report Seeking a Balance in 1996.

Employers argued that this review made many recommendations, but it didn’t recommend a blanket prohibition on replacement workers. They noted that the review found replacement workers necessary sometimes for keeping a business economically viable.

Employers further indicated that nothing has changed since the Sims Report and the introduction of the current Code. Some argued that the use of replacement workers is rare, and no evidence has shown the need to fix the current system. They stated that prohibiting the use of replacement workers would be a solution looking for a problem.

On the topic of balance, employers took a different position than unions. They stated that the right to strike is balanced by the legal ability to use replacement workers, when necessary, not the right to lock out.

“The use of replacement workers balances the union right to strike, and maintains the safety and security of sensitive industries, like nuclear, or the security of the supply chain for transport, which is relied upon every day by Canadians.”

Employers in sectors such as transportation, telecommunications and agriculture were particularly concerned about the impact that a replacement worker prohibition could have on their production and/or services. They argued that being able to use replacement workers helps avoid or reduce the negative impact of a strike or lockout on businesses, on the economy and on the life of Canadians. One employer submission suggested that although using less skilled replacement workers can reduce efficiency, it would still be better than a full shutdown of operations during a work stoppage.

"Employers must be able to maintain essential services, and their business’s viability, when there is a strike, by having the option to use replacement workers."

Impacts of replacement worker prohibition

Unions agreed that prohibiting the use of replacement workers would bring positive changes. Many referred to the existing legislation in British Columbia and Quebec. They suggested that the Code should include a similar prohibition.

According to union stakeholders, a replacement worker ban would benefit the collective bargaining process by restoring a balance between employers and workers during a work stoppage. They stated that fairer balance of power in collective bargaining would lead to better pay for workers and reducing wage inequality. Some written submissions also noted that the prohibition has the potential to increase unionization rate. They said it would encourage young generations to join the industry by providing better negotiated pay and working conditions.

“Banning scab labour will provide a long-overdue improvement of the right and power of workers to bargain collectively... This power is suppressed when employers use scab labour to replace the work of their striking employees, and this is true regardless of whether replacement labour comes from within the unionized workforce, from management or hired externally.”

Indigenous labour representatives suggested that Indigenous workers can benefit from the prohibition to reach a collective agreement with higher pay and better working conditions. They further noted that it will encourage good relationships between Indigenous and non-Indigenous.

Another positive effect that unions brought up many times was improving labour relations. They indicated that prohibiting the use of replacement workers would reduce the tension between workers and the employer as well as among workers themselves. This would lead to better labour relations and help create a harmonious workplace, unions said.

We also heard from some union stakeholders that they disagree that the prohibition would have negative impact on the economy. They believed that a replacement workers ban would bring earlier resolution of disputes, which would eventually benefit the economy. Some unions noted that many advanced economies in the world have implemented a replacement workers ban. They also indicated that in Canada, both Quebec and British Columbia have strong economies despite banning replacement workers.

“A federal ban on replacement workers would in no way be exceptional, either in Canada or abroad.”

On the other hand, employers presented several arguments against prohibiting replacement workers.

First, employer representatives in roundtables argued that prohibiting replacement workers would lead to an imbalance to Part I of the Code. They reiterated that the right to strike isn’t balanced by the right to lock out, but rather by the legal ability to use replacement workers, if necessary. They argued that the Government never viewed the use of replacement workers as a problem before 2022. According to them, nothing had fundamentally changed in federal labour relations since the Sims Report in 1996. Employers also noted that the report did not recommend prohibiting replacement workers because there may be times when their use is necessary.

Most employers argued that a prohibition on the use of replacement workers would result in longer and more frequent work stoppages. Research from British Columbia and Quebec that found prohibitions lead to longer and more frequent strikes was also highlighted.

Some employer stakeholders indicated that by banning replacement workers, Canadian companies may be forced into deals they can’t afford, and it will make them less competitive. They suggested that to avoid strikes in the future, some companies could start looking to outsource or contract out some of their work.

There was also the concern that smaller bargaining units may have the ability to shut down company-wide operations, in some cases resulting in thousands of layoffs. Employers argued that this could mean significant harm to Canadians, especially in critical sectors like air, rail and marine transport. To avoid serious consequences in the supply chain and the economy, employers suggested the government may need to rely on back-to-work legislation more often.

“The evidence shows that a ban on the use of temporary replacement workers means the following:

• Critical services to Canadians will be disrupted more regularly.
• Strikes will be more common and will last longer.
• The labour relations climate will become more confrontational.
• Back-to-work legislation will be required more often.”

Many stakeholders expressed concerns that disruptions due to work stoppages could have serious negative impact on the Canadian supply chain. According to them, this could result in a series of consequences, including harming the safety and security of Canadians, reducing Canada’s competitiveness as a trading partner and a place to do business, and damaging the Canadian economy. Some written submissions also referred to the National Supply Chain Task Force Final Report^{Footnote 7} and called for the Government to consider avoiding labour disruptions as a priority.

“Canadian manufacturers are some of the biggest users of transportation services that falls under this legislation. Transportation services are a critical link that sustain manufacturing supply chains. It is how we move critical components for production and our good to markets across Canada, North America and globally. Given the many disruptions of the past year and the ongoing supply chain disruptions, our industry cannot afford future interruptions to transportation network.”

What should be prohibited and what should be exempted

Unions and union representatives generally called for a comprehensive prohibition. They believed the prohibition should prevent employers from sending anyone to do the work of a striking or locked out workers, no matter the reason. For most unions, this included prohibiting the workers who are on strike or locked out from being able to work, if they chose to.

Most unions also argued there should be no exceptions to the prohibitions. However, some suggested that employers can use replacement workers under certain circumstances:

• Some said that employers could use managers hired before bargaining began, as replacement workers during work stoppages.
• One union indicated that members of the bargaining unit could cross the picket line and continue their jobs if they wish to.
• Some stakeholders said that employers should only be able to use replacement workers to protect public health or prevent destruction of property.

Unions also wanted to avoid any loopholes in the prohibition. As a result, some proposed that the prohibition should not focus on the types of workers the employer can and can’t use, but on the work that can’t be done. They argued this was the best way to prevent employers from automating or outsourcing unionized jobs while workers are on strike or locked out.

“Legislation prohibiting the use of replacement workers in federally regulated sectors should clearly ban all replacement workers in federally regulated sectors in all circumstances, except where public safety or health is at risk; the current ban does not go far enough.”

Employers fundamentally disagreed with the concept of prohibiting replacement workers. The majority weren’t willing to discuss how to structure the prohibition. Their strong position was that the Government should not proceed. When employers discussed the specifics of a replacement worker ban, they focused on the exceptions that the prohibition should include:

• Most employers believed that they should be able to use managers to replace employees during a work stoppage.
• Some suggested that the prohibition should not apply to bargaining unit members who choose to cross the picket line and other employees who are hired before bargaining begins.
• Some asked to include workers who provide essential services or perform work that has significant economic impact on the public and/or the employer.
• Several employers also noted that they have longstanding relationships with contractors, and the prohibition should not affect their ability to continue those relationships.

Employers in rail, maritime, airlines, agriculture, telecommunications, and broadcasting asked for exemptions for their specific sectors. These stakeholders consider all or at least part of their work as essential.

• Many were concerned about the negative impact on the Canadian supply chain of a replacement worker ban. Employers in rail and maritime indicated that using replacement workers allows them to transport essential and/or hazardous goods safely, which protects public health and safety.
• Employers in the agriculture industry cautioned the significant impact of railway strikes or lockouts on the agricultural products deliveries. They asked that grain shipments be exempted from the replacement worker ban.
• Airlines, especially Indigenous-owned airlines working with remote communities, underlined the importance of maintaining their services. They stated that not being able to use replacement workers to transport essential goods and services could cause health and safety issues for First Nations and Inuit communities.
• Employers in telecommunications referred to the impacts of the 2021 Rogers outage to highlight the need for telecommunications service to continue despite any strike or lockout.

“Further, given the potential negative impacts on federal infrastructure, the government should consider which industries should be subject to further exceptions to protect supply chains and integral operations.”

Some employer stakeholders acknowledged that certain employers may use replacement workers in a way to avoid bargaining or undermine the union. To deal with these few bad actors, some recommended strengthening the language in the current Code rather than prohibiting replacement workers altogether.

What we also heard from one employer was that the prohibition should only apply when the employer has locked out its employees, but not when the union chooses to strike.

How should the prohibition be enforced

Union stakeholders were united in their support for strong enforcement mechanisms. Their proposals were generally focused on two things:

• imposing financial penalties on employers who violate the prohibition, and
• making sure a third party has the power to investigate complaints.

Unions indicated that monetary penalties or fines should be high enough to make sure employers respect the prohibition. One union submission indicated that people who work as replacement workers should face consequences as well.

When it comes to investigating complaints, many unions suggested that Quebec’s model – where the Minister can appoint an investigator – should be followed. They stressed that inspectors or investigators should have the tools to stop the violation instead of just making a report to the Canada Industrial Relations Board (CIRB). Some suggested that the investigation should allow union representation. Others proposed that the employer should be responsible to prove that they aren’t using illegal replacement workers, if there is a complaint.

“In terms of enforcement, the Code must impose a reverse onus on the employer to prove that they are not using replacement workers… This is particularly important because, in the case of a lockout or strike, union members will not be present on the worksite and are less able to monitor the employer’s activities and collect evidence by which to prove that the employer is breaching the Code and using replacement workers.”

There were some areas where employers and unions could agree. For instance, they both indicated that the CIRB and the Federal Conciliation and Mediation Services could use more resources to help make quicker decisions and better assist the parties in negotiation.

When it comes to enforcement, few employers discussed it, and they said that there was no need to impose financial penalties. Instead, they indicated that an order to stop the use of replacement workers would be enough. Some employers further suggested that the Government properly enforce the current, limited prohibition rather than create a new prohibition.

“Finally, in the event that a breach on the use of replacement workers is found, [the employer] submits that a cease and desist order would be a sufficient remedy. Any further remedy, such as the issuance of fines, would be overly punitive, especially in the context of a strike or lockout where the employer is already suffering significant economic harm.”

Other issues raised

During consultations, stakeholders took the opportunity to raise other issues that aren’t strictly about replacement workers.

Reinstatement

Currently, the Code protects employees from losing their job or facing discipline just because they were on strike or locked out. However, this is based on the CIRB’s interpretation of the Code. It isn’t stated in black and white. We heard from some unions that the legislation should strengthen this protection of workers’ right to reinstatement after a work stoppage.

Arbitration after long stoppage

Two unions called for the Government to provide a mechanism to end longstanding strikes. They recommended introducing the right to apply for interest arbitration when a work stoppage lasts longer than a set amount of time.

Several employer stakeholders also recommended amending the Code to grant authority to the Minister of Labour and Seniors or Cabinet to refer labour disputes in critical sectors to binding arbitration if the parties can’t reach a negotiated agreement through collective bargaining. One stakeholder further proposed that the Government consider the US model that provides mandatory dispute resolution procedures and the option of issuing non-binding recommendations to prevent harmful work stoppages.

Other actions to reduce replacement workers

To limit the use of replacement workers, some unions asked to stop issuing work permits to foreign workers who come to work as replacement workers under any circumstances. Two union stakeholders also called on the Government to lead by example and remove language that promotes or requires the use of replacement workers by contractors during a strike or lockout from future contracts.

Secondary picketing^{Footnote 8}

Some employers suggested that if the Government prohibits replacement workers, it should also prohibit secondary picketing, like in British Columbia.

Mandatory review of maintenance of activities agreements

The current maintenance of activities process does not require the CIRB, or any other third party to review or validate a maintenance of activities agreement. Before consultations, the Government had heard that this kind of review might be necessary to make sure that the agreement fully protects the public. In Quebec, the Tribunal administratif du travail must approve all essential services agreements or lists before any work stoppage can begin. However, only certain industries like healthcare are required to create these agreements or lists.

What we heard from most unions and union representatives was that there is no need for a third party to review and verify agreements. They argued that the union and the employer are best positioned to make these decisions, and requiring a review will only lead to delays in bargaining. For these stakeholders, it should be enough just to submit copies of the agreement to the Government for their awareness.

In general, stakeholders agreed that if any third party were to review maintenance of activities agreements, it should be the CIRB. They indicated that stakeholders trust the CIRB, and an external organization may not have the expertise required to resolve the issues.

“We also agree that the parties involved in the strike or lock-out should be given the opportunity to negotiate the nature of essential services and, only when disputes arise, should the Canada Industrial Relations Board (CIRB) be tasked with intervening.”

We didn’t hear many comments from employers on this topic, and views were mixed. One employer representative agreed with unions’ general position that there is no need for third party approval of maintenance of activities agreements. However, two other employer stakeholders suggested the Government create a division within the CIRB to deal only with maintenance of activities issues.

“A division of the CIRB specialized with regards to maintaining operations should be created. Since this division would be solely responsible for hearing cases of maintaining operations, this specialized division could determine, at all times, if a situation justifies its intervention, and not only if this request has been made within the 15-day period of the notice of dispute.”

Processing times

Both union and employer stakeholders told us that the maintenance of activities proceedings before the CIRB take too long. Unions submitted two main recommendations to solve this issue:

• First, they argued the CIRB should have enough funding and resources to provide services and resolve disputes quickly. One submission further indicated that “control over administrative tribunal services should be restored to the CIRB” rather than supported by the Administrative Tribunals Support Service of Canada (ATSSC).
• Second, they felt that the Code should impose strict time limits, and both the CIRB and the parties should follow the time limits.

Some employers thought that creating a special division within the CIRB could improve the processing time. Another employer believed it would be better to send maintenance of activities complaints to a different tribunal that is more focused on the public interest.

Minister’s involvement

As outlined in Annex A, the union and the employer have two strict deadlines they must respect. If they miss either of these deadlines, they can’t go to the CIRB to resolve a dispute about maintenance of activities. On the other hand, the Minister of Labour and Seniors has the power to refer a question to the CIRB at any time after notice of dispute has been given. If they miss their deadlines, sometimes stakeholders will ask the Minister to intervene and refer a dispute to the CIRB.

Most union stakeholders told us that the Minister should play less of a role in the maintenance of activities process. They argued that the current process puts the Minister in the difficult spot of needing to ensure the health and safety of the public is protected – but knowing that a referral will temporarily suspend the right to strike. Some union stakeholders suggested that the Minister should focus more on encouraging the parties to negotiate and reach a maintenance of activities agreement. They also asked that the Minister’s participation in the process be fair and transparent.

“This would be especially helpful in circumstances where employers have taken hard-line positions on maintenance of activities, as the intervention by the Minister (through a conciliation officer) could help encourage employers to re-evaluate their positions and negotiate meaningfully over this issue.”

Few employer stakeholders provided comments on this question. Those who did were generally supportive of the Minister’s involvement in the maintenance of activities process. Some indicated that it isn’t a problem because the Minister’s duties include making difficult decisions. Others, despite not opposing the ministerial involvement, suggested that the Minister should play a more effective role in preventing danger and harm to public health and safety.

“This intervention generally occurs after the damage is done and the Canadian economy has already been affected, sometimes considerably and irreparably. […] the role of the Minister of Labour could consist of thoughtfully establishing in advance the sectors that are likely to affect the Canadian population significantly and intervening upstream to impose the total or partial maintenance of activities.”