Report in which the committee requests to be kept informed of development - REPORT_NO299, June 1995

1. 155. In a communication dated 6 October 1994, the Canadian Labour Congress (CLC) presented, on behalf of the Public Service Alliance of Canada (PSAC), a complaint of violation of trade union rights against the Government of Canada. The Public Services International (PSI) expressed its support for the complaint in a communication dated 19 October 1994.
2. 156. The federal Government sent its observations in a communication dated 2 March 1995.
3. 157. Canada has ratified the Freedom of Association and the Protection of the Right to Organize Convention, 1948 (No. 87). It has not ratified the Right to Organize 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 complainants' allegations

1. 158. In its communication dated 6 October 1994, the CLC explains that on behalf of the 155,000 members of its affiliate, the PSAC, it wishes to lodge a complaint against Bill C-17, which on 15 June 1994 became the Budget Implementation Act, 1994 (hereafter "the Act"). The main provisions of the Act referred to by the complainant organizations and the Government are annexed to this document. The CLC attached to its communication a document prepared by the PSAC which gives details of the allegations involved in this complaint. In short, the complainant organizations allege that the Act is incompatible with the fundamental principles underlying freedom of association and that it contravenes ILO Conventions Nos. 87, 98, 151, and 154.
2. 159. The complainant organizations explain that the Act is the second extension of the Public Sector Compensation Act, 1991. It recalls that this 1991 Act had extended the term of all federal public sector collective agreements for a period of two years, from various dates in 1991 and 1992, imposing a wage freeze for the first 12 months and a 3 per cent wage increase in the final 12 months. This 1991 Act has been examined by the Committee (Case No. 1616, 284th Report, paras. 595-641).
3. 160. The complainant organizations add that the effects of the Public Sector Compensation Act of 1991 have been extended through the Government Expenditures Restraint Act, 1993 No. 2, which has also been examined by the Committee in a previous complaint (Case No. 1758, 297th Report, paras. 190-230). The 1993 Act had the effect of extending by law the expiry date of the federal public sector collective agreements that were coming to an end to various dates in 1995 and 1996.
4. 161. The complainant organizations note that the Act extends the wage restrictions initially imposed in 1991 by a further two years. Moreover, it suspends the provisions of collective agreements concerning the payment of increments within grade, thereby affecting approximately 40 per cent of federal sector workers. The complainant organizations explain that Canadian public service workers who are hired or promoted are paid in accordance with a salary grid whose evaluation parameters are based on seniority, without taking performance into account. On the basis of this grid, wages rise in accordance with years of service until they reach a pre-established maximum.
5. 162. The complainant organizations allege that the Act undermines freedom of association and they reiterate the position they adopted in their complaint against the Government Expenditures Restraint Act, 1993 No. 2. Among other points they recall that the Act, like those that preceded it, excludes all forms of collective bargaining concerning conditions of employment of a monetary nature.
6. 163. The complainant organizations also maintain that the six years of wage restrictions, including five years of wage freezes, imposed by the three acts, constitute the longest period of legislated wage restraint in Canadian history. They describe how in August 1994, during the Inquiry into the Value of Public Services, three academic experts questioned whether collective bargaining would ever be re-established in the public sector and considered that the restraint programme at the federal level had all the earmarks of a permanent system.
7. 164. Although the Government affirms that the main objective of these measures is to reduce the deficit and the public debt, the complainant organizations are convinced that the Act is not an appropriate way of achieving this. On the contrary, the complainant organizations are convinced from the results of an economic study that the Act will have a devastating effect on employment and will not have any impact on the country's financial situation. Moreover, it means that affected employees will suffer a loss of salary of approximately 3 per cent, on top of the cuts resulting from the provisions of the two previous acts. On the basis of calculations carried out by the complainant organizations, the salary of a PSAC member working directly for the Canadian Government will be 6.7 per cent less than if it had kept pace with inflation. Because it does not provide for a small wage increase for low-income workers, as the 1991 Act did, the complainant organizations maintain that the Act does not include any protective measures for the most affected workers and that it will have a disproportionate effect on short-term employees, employees who have recently been promoted and employees approaching retirement age, and also on women. Furthermore, the complainant organizations allege that the Act is discriminatory in that it mainly affects women and prevents the application of the principle of equal pay for work of equal value (pay equity).
8. 165. For the complainant organizations the adoption of three successive acts to establish all monetary conditions for federal public sector employees for a period of six years, without their being able to bargain freely, raises legitimate questions about union membership. In fact, any government action that strips workers of their right collectively to determine their conditions of employment calls into question the role and legitimacy of the very association.
9. 166. The complainant organizations also allege that the committee set up by the Government and mandated to carry out a joint review of the efficiency of the Canadian public service as well as to shorten the length of the wage freeze if the objectives were achieved sooner, did not come up to expectations. The efficiency review meeting between the Government and the federal public sector bargaining agents took place a month after the Budget was tabled. After that, frustration with the process deepened to the point that the PSAC suspended its involvement in May 1994. Despite the passage of time, and despite numerous written requests to the President of the Canadian Treasury Board, at the time of suspending their involvement the bargaining agents still did not know how the savings identified were going to be allocated.
10. 167. The complainant organizations are convinced that the situation is quickly turning into a permanent system of legislated wage fixing in the federal public sector. Given the seriousness of the legislative incursions into this area, the duration of the restraint measures and the patent unfairness of the wage and increment freeze, the complainant organizations request that a study mission be sent to Canada to investigate the general situation of collective bargaining in the Canadian public service.

B. The Government's reply

1. 168. The Government explains that the purpose of the Act was to fulfil the goals of the 1994 Budget which called for considerable economic restraint measures to address Canada's financial difficulties, which were caused by a severe deficit and a heavy national debt. The Government wishes to restore a sense of responsibility to the management of public finances and reduce its operating costs. According to government projections, the restraint measures announced in the 1994 Budget should bring about a reduction in the national deficit of over 13 billion dollars during the period covering the 1993-94 and 1995-96 fiscal years. The wage freeze and the two-year suspension of incremental increases should be understood in this context.
2. 169. The Government considers that the Act does not contravene the Committee's criteria in that it is an exceptional measure dictated by financial difficulties which does not exceed a reasonable period and which is accompanied by safeguards to protect workers' living standards. The Government recognizes however that the Act does in practice restrict collective bargaining with respect to conditions of employment and of compensation, but maintains that the parties can negotiate and reach agreement on all other matters that are non-monetary in nature (as per section 8 of the 1991 Act, as amended by section 6 of the 1993 Act). Furthermore, the Government recalls the negotiations held with various public service unions which ultimately resulted in collective agreements being reached with the Economists, Sociologists and Statisticians Association, the Canadian Association of Professional Radio Operators, the University Teachers Association and the Professional Institute of the Public Service of Canada.
3. 170. With respect to the allegations of sexual discrimination and non-respect for the principle of pay equity, the Government states that it is committed to the concept of equal pay for work of equal value and recalls that the Human Rights Tribunal must give a ruling on these issues, in particular on the right of workers to have the wage gap closed.
4. 171. With regard to the lack of protective measures for the workers likely to be the most affected, the Government maintains that in fact the Act contains safeguards providing for certain terms and conditions in collective agreements that protect workers' living standards. By way of example, the Government refers to section 2(1)(c) (compensation) of the 1991 Act, which provides for the payment of a lump sum of 500 dollars and also to section 7(1) which maintains the provisions relating to pay equity contained in the Canadian Human Rights Act.
5. 172. With reference to the Public Service Efficiency Review Committee the Government explains that the review is carried out at the federal administration level and involves more than just the work of this one committee. The Government is determined to make the public service more efficient and at the last count some 22 major studies were being conducted. Among other issues, the review aims to determine what services departments and central agencies should continue to provide and what should be change, eliminated or turned over to the provinces or the private sector.
6. 173. It is for these reasons that the Government claims that the Public Sector Compensation Act, 1991, as amended by the Government Expenditures Restraint Act, 1993 No. 2, and the 1994 Act, is rendered necessary by current circumstances. The Government reiterates that the Act does not extend beyond a reasonable period and is accompanied by safeguards to protect workers' living standards. It is a fair and reasonable compromise between leaving, as far as possible, a certain autonomy to the bargaining parties and taking the necessary measures to overcome the prevailing financial difficulties. The Government therefore concludes that the Act in no way violates either the principles of freedom of association or the international labour standards established by Conventions Nos. 87, 98, 151 and 154.

C. The Committee's conclusions

1. 174. The Committee notes that this case is related to two previously examined cases (Case No. 1616, 284th Report, paras. 595-641; and Case No. 1758, 297th Report, paras. 190-230). It concerns certain restrictions on collective bargaining that are imposed on employees of the federal public service by the Budget Implementation Act, 1994 (hereafter "the Act"), which freezes their wages and increments for a period of two years.
2. 175. Before examining the substance of the complaint, the Committee should explain the circumstances surrounding it. Since October 1991 the Committee has received 20 complaints against the federal Government and against various provinces, 12 of which have been presented by the current complainant organization (Federal Canada, Cases Nos. 1616, 1758, 1800; British Colombia, Case No. 1603; Manitoba, Cases Nos. 1604 and 1715; New Brunswick, Case No. 1605; Nova Scotia, Cases Nos. 1606, 1624 and 1802; Newfoundland, Case No. 1607; Ontario, Case No. 1722; Quebec, Cases Nos. 1733, 1747, 1748, 1749, 1750; Prince Edward Island, Cases Nos. 1779, 1801; Yukon Territory, Case No. 1806). All these complaints relate to the postponement of wage increases or to wage cuts or freezes in the public service and to restrictions on the right of employees to bargain collectively within these various jurisdictions. These measures have sometimes been accompanied by a ban on strikes.
3. 176. The Committee considers that the large number of complaints that have been lodged during the course of the last few years reflect serious and profound difficulties in reaching agreement on the determination of employment conditions in the public service in Canada both at the federal level and in the various provinces. In these circumstances, and in order to find solutions to the problems that have arisen, the Committee suggests that the Government make use of the assistance of the International Labour Office, in particular through an advisory mission.
4. 177. The Act is the second extension of a 1991 Act whose initial aim was to freeze the wages of public service employees for a period of two years. The effects of the 1991 Act were then extended by a 1993 Act for a period of two years. As mentioned above, both the 1991 and the 1993 Acts have been examined by the Committee (Cases Nos. 1616 and 1758). The Committee refers in general to its comments on these two cases. It also considers that it is appropriate to recall the recommendations it made during its last examination (Case No. 1758), namely that:
   • (a) The Committee deeply regrets that the Government has not implemented the recommendations it has made, but rather has once again placed serious restrictions on collective bargaining in the public service by renewing a unilateral freeze on pay.
   • (b) The Committee expresses its serious concern at the frequent recourse had by the Government to statutory limitations on collective bargaining and considers that such limitations go beyond what it has considered to be permissible restrictions on collective bargaining.
   • (c) The Committee requests the Government to take the necessary measures, through consultation with the trade union organizations involved, to strengthen dialogue and exchanges with a view to finding suitable machinery for settling disputes which could help to prevent the unilateral and statutory imposition of conditions of employment and re-establish a negotiating system which enjoys the utmost confidence of the parties.
   • (d) The Committee urges the Government to take its observations into consideration in the future and expresses the strong hope that the Government will allow a full return to normal free collective bargaining in the public service. It requests the Government to keep it informed of any developments in this regard.
5. 178. The Committee must once again deplore the fact that the Government has not implemented the recommendations it made during its previous examinations but has once more imposed a series of major restrictions on collective bargaining in the public service by freezing wages and increments for two additional years.
6. 179. In this case, the Government maintains virtually the same arguments as for Cases Nos. 1616 and 1758, claiming among other things that the Act conforms to criteria established by the Committee and that it is an exceptional measure imposed by the major economic difficulties it must confront. The complainant organizations question the soundness of the Government's economic argument and claim that the measures will have a disastrous effect on employment, without however having any positive impact on the country's financial situation.
7. 180. The Committee does not doubt that the Government is convinced that a remedy must be found for the country's financial situation and that the twofold extension of the 1991 Act is therefore justified. The complainants are in turn convinced that the method employed by the Government is far from the best way to solve Canada's economic problems. As has already been mentioned in previous cases concerning various restrictive laws in Canada (Cases Nos. 1172, 1234, 1247 and 1260, 241st Report, para. 113; Case No. 1616, 284th Report, para. 633; and Case No. 1758, 297th Report, para. 224), it is not for the Committee to express a view on the soundness of the economic arguments used by the Government to justify its position or on the measures it has adopted (see also the general remarks given in the Study and Information Mission Report concerning these cases: 241st Report, paras. 9-13 of the Annex). It is, however, for the Committee to express its views on whether, in taking such action, the Government has gone beyond what the Committee has considered to be acceptable restrictions that might be placed temporarily on free collective bargaining (Case No. 1172, 241st Report, para. 114, and Case No. 1758, 297th Report, para. 224).
8. 181. In similar cases concerning limitations on the right to collective bargaining related to economic stabilization measures, the Committee has recognized that when, for urgent reasons relating to national economic interests and in the framework of a stabilization policy, the 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, in particular those who are likely to be the most affected (Digest of decisions and principles of the Freedom of Association Committee, 3rd edition, 1985, para. 641; Case No. 1147, 222nd Report, para. 117; Cases Nos. 1171 and 1173, 230th Report, paras. 162 and 573; Cases Nos. 1603, 1604, 1605, 1606, 1607 and 1616, 284th Report, paras. 78, 321, 500, 542, 587 and 635; Case No. 1624, 286th Report, para. 223; Cases Nos. 1715 and 1722, 292nd Report, paras. 187 and 547; and Case No. 1758, 297th Report, para. 225). The Committee of Experts on the Application of Conventions and Recommendations adopted the same approach in this respect (General Survey on Freedom of Association and Collective Bargaining, 1994, para. 260).
9. 182. In the present case, the second extension of the 1991 Act is clearly not an exceptional measure, as the criteria established by the Committee have not been met. The Committee cannot but express its concern at the danger of institutionalizing in a permanent fashion recourse to the legislation in order to fix wages in the public sector unilaterally. The Committee notes that the combined effects of the three Acts will place the burden of a six-year wage control programme - under which wages will have been frozen for five years and increments for two years - on the shoulders of federal public sector workers. The Committee deplores that as a result the Act will have a further negative impact on the living standards of the workers concerned and that the legislation contains no adequate safeguards in this respect. As this is the longest wage-restriction programme ever adopted in Canada, it clearly goes beyond what the Committee has considered to be permissible restrictions on collective bargaining, in particular with respect to a reasonable time-limit.
10. 183. The Committee notes that the Act excludes the discussion of compensation-related issues from collective bargaining between the Government and its employees. The Act thereby prevents any form of reconciliation between the parties with a view to finding suitable machinery for settling disputes in this connection, and can only have harmful and destabilizing repercussions on labour relations. The Committee profoundly regrets that yet again the Government has not given preference to collective bargaining to determine the pay conditions of these employees, through which the objectives recognized as being in the general interests of the country could have been extensively discussed and understood by all parties, but that instead it opted for a measure which deprives workers of a fundamental right and of a means of defending and promoting their economic and social interests.
11. 184. Given this situation, the Committee concludes that the measures taken by the Government in no sense correspond to the fair and reasonable compromise that should be sought between the need to preserve as far as possible the autonomy of the bargaining parties, on the one hand, and measures which must be taken by governments to overcome their budgetary difficulties, on the other (Case No. 1758, 297th Report, para. 229. See General Survey, 1994, op. cit., paras. 263 and 264). It urges the Government to take these observations into consideration and to refrain from resorting to similar measures in the future in this regard.
12. 185. Lastly, the Committee urges the Government to take into consideration the possibility of establishing a procedure which enjoys the utmost confidence of the parties. This procedure should allow them to have recourse to conciliation or mediation and then to voluntarily have recourse to an independent arbitrator so as to resolve their disputes, whose arbitration awards should be binding on both parties and fully and rapidly implemented.

Annex

1. Extracts of the Public Sector Compensation Act, 1991 as amended by the
2. Government Expenditures Restraint Act, 1993 and the Budget Implementation Act,
3. 1994
4. Interpretation
5. 2. (1) In this Act,
6. ...
7. "compensation plan" means the provisions, however established, for the
8. determination and administration of compensation;
9. ...
10. "compensation" means all forms of pay, benefits and perquisites paid or
11. provided, directly or indirectly, by or on behalf of an employer to or for the
12. benefit of an employee, except those paid or provided:
13. ...
14. (c) in one lump sum payment that may be made payable, on or after the coming
15. into force of this Act, to or for the benefit of an employee whose rate of pay
16. does not exceed $27,500 and that is in an amount equal to
17. (i) where the lump sum is payable to or for the benefit of an employee whose
18. rate of pay does not exceed $27,000, $500, or
19. (ii) where the lump sum is payable to or for the benefit of an employee whose
20. rate of pay exceeds $27,000 but does not exceed $27,500, that portion of $500
21. that the rate of pay for that employee exceeds $27,000.
22. 3. (1) This Act applies to employees employed in or by
23. (a) the departments of the Government of Canada or other portions of the
24. public service of Canada, set out in Schedule I;
25. (b) the agencies, boards, commissions or corporations set out in Schedule II;
26. and
27. (c) the Senate, House of Commons or Library of Parliament.
28. (2) This Act applies to
29. (a) the staff of ministers of the Crown and of members of the Senate and the
30. House of Commons;
31. (b) directors of corporations set out in Schedule II;
32. (c) the members and officers of the Canadian Forces; and
33. (d) the members and officers of the Royal Canadian Mounted Police.
34. ...
35. 5. (1) Subject to section 11, every compensation plan for employees to whom
36. this Act applies that was in effect on February 26, 1991, including every
37. compensation plan extended under section 6, shall be extended for a period of
38. seventy-two months beginning on the day immediately following the day on which
39. the compensation plan would, but for this section, expire (as amended by the
40. Acts of 1993 and 1994).
41. ...
42. 7. (1) Notwithstanding any other Act of Parliament except the Canadian Human
43. Rights Act but subject to this Act, the terms and conditions of
44. (a) every compensation plan that is extended under section 5 or 6, and
45. (b) every collective agreement or arbitral award that includes a compensation
46. plan referred to in paragraph (a)
47. shall continue in force without change for the period for which the
48. compensation plan is so extended.
49. (2) The Treasury Board may change any terms and conditions of a compensation
50. plan that is extended under section 5 or 6 or in respect of which section 11
51. applies, or of a collective agreement or arbitral award that includes such a
52. compensation plan, if those terms and conditions are, in the opinion of the
53. Treasury Board, in respect of a conversion or reclassification that is
54. required to implement a new or revised classification standard.
55. (2.1) Where, before December 10, 1992, the Treasury Board has, pursuant to
56. subsection (2), changed any of the terms and conditions of a compensation plan
57. to implement a new or revised classification standard, the new or revised
58. compensation plan that is in effect as a result of that implementation shall
59. be
60. (a) extended for a period of forty-eight months beginning on the day
61. immediately following the day on which the compensation plan would, but for
62. this subsection, expire; and
63. (b) deemed to include a provision to the effect that the wage rates in effect
64. under the plan on the day on which the plan would, but for this subsection,
65. expire shall not be increased for the forty-eight month period immediately
66. following that day (as amended by the Acts of 1993 and 1994).
67. ...
68. 8. The parties to a collective agreement, or the persons bound by an arbitral
69. award, that includes a compensation plan that is extended under section 5 or 6
70. or in respect of which section 11 applies may, by agreement in writing, amend
71. any terms and conditions of the collective agreement or arbitral award, other
72. than wage rates or other terms and conditions of the compensation plan.
73. 9. (1) Notwithstanding any other Act of Parliament but subject to section 11,
74. every compensation plan for employees to whom this Act applies shall be deemed
75. to include a provision to the effect that the wage rates in effect under the
76. plan on the day on which the plan would, but for section 5, expire shall not
77. be increased for the twelve month period immediately following that day.
78. (2) The wage rates in effect under subsection (1) shall be increased for the
79. twelve month period immediately following the period referred to in that
80. subsection by three per cent.
81. (3) The wage rates in effect under subsection (2) shall not be increased for
82. the forty-eight month period immediately following the period referred to in
83. that subsection (as amended by the Acts of 1993 and 1994).
84. (4) Notwithstanding any other Act of Parliament, each of the compensation
85. plans for the persons mentioned in subsection 3(3.1) shall be deemed to
86. include a provision to the effect that the wage rates in effect under the plan
87. on the day on which the plan would, but for subsection 5(3), expire shall not
88. be increased for the forty-eight month period immediately following that day
89. (as amended by the Acts of 1993 and 1994).
90. ...
91. 13. A provision of a compensation plan for employees to whom this Act applies
92. that is entered into or established at any time is of no force or effect to
93. the extent that it provides for an increase in wage rates that would bring
94. wage rates to a level that they would, but for this Act, have reached.
95. 14. (1) During the period beginning on the day on which this Act comes into
96. force in which a compensation plan, as extended under section 5 or 6, or in
97. respect of which section 11 applies, is in force,
98. (a) no bargaining agent shall declare, authorize or direct, or condone or
99. acquiesce in the continuation of, a strike of employees to whom the
100. compensation plan applies;
101. (b) no representative or officer of a bargaining agent shall counsel or
102. procure the declaration, authorization or direction of, or condone or
103. acquiesce in the continuation of, a strike of those employees; and
104. (c) no employee to whom the compensation plan applies shall participate in a
105. strike.
106. ...
107. 15. Every bargaining agent that contravenes section 14 is guilty of an offence
108. punishable on summary conviction and is liable, for each day or part of a day
109. during which the offence continues, to a fine not exceeding $100,000.
110. 16. Every representative or officer of a bargaining agent that contravenes
111. section 14 is guilty of an offence punishable on summary conviction and is
112. liable, for each day or part of a day during which the offence continues, to a
113. fine not exceeding $50,000.
114. 17. Every employee who contravenes section 14 is guilty of an offence
115. punishable on summary conviction and is liable, for each day or part of a day
116. during which the offence continues, to a fine not exceeding $1,000.
117. ...
118. 20. (1) Any fine imposed on a bargaining agent or a representative or officer
119. of a bargaining agent under section 15 or 16 constitutes a debt payable to Her
120. Majesty in right of Canada and may, without prejudice to any other recourse
121. available to Her Majesty with respect to the recovery thereof, be recovered by
122. Her Majesty by a deduction of the amount of the fine or any portion thereof
123. from the amount of the membership dues that the employer of the employees
124. represented by the bargaining agent is or may be required, pursuant to any
125. collective agreement that is or may be entered into between the employer and
126. the bargaining agent, to deduct from the pay of the employees and to remit to
127. the bargaining agent.
128. ...
129. 22. The Governor in Council may, on the recommendation of the Treasury Board,
130. by order, terminate the application of this Act in respect of any employee or
131. group of employees to which this Act applies.