The unfinished business of labour law reform in Ontario: A strategy for implementing sectoral bargaining

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Workers and community activists protest at Tim Hortons as some Tim’s Ontario franchisees eliminated paid breaks, fully-covered health and dental plans, and other benefits for their workers in response to an increase in the province’s minimum wage.

Introduction

This post on sectoral collective bargaining is the first of a number of posts related to the unfinished business of labour law reform in Ontario that will be published by Canada Fact Check during the run-up to the June 7, Ontario election. Future posts will focus on a range of topics related to employment standards, pensions, health and safety, and the WSIB.

While the post contains a fair amount of detail on the specifics of sectoral collective bargaining, it is first and foremost a political strategy paper. As such, if and when readers feel they’ve had enough of the fine points of the Changing Workplaces Review and Ontario’s Bill 148, they should feel free to scroll down to the “Implementing the strategy” section.

The context

On November 23, the Ontario legislature passed Bill 148, a sweeping revision of Ontario’s employment standards and labour relations legislation. While there was (and continues to be) substantial media coverage of employer opposition to the bill’s provisions to raise the minimum wage to $15/hr., there was far less coverage of other aspects of the bill, particularly the labour relations portion. In part, this is because labour relations is a somewhat more abstract concept than employment standards. Employment standards sets out a basic floor for all workers in areas such as wages, overtime, and vacation time. In contrast, Ontario’s Labour Relations Act sets out the rules by which employers and unions relate to each other including the initial certification process to form a union as well as the rules related to subsequent collective bargaining – including strikes. These rules can be highly technical and it was predictable that the debate over options to amend the Ontario Labour Relations Act would be pretty much ignored by the media.

Most of the changes in Bill 148 (albeit not the minimum wage increase) were rooted in recommendations contained in the final report of the Changing Workplaces Review, a two-year effort led by co-commissioners, Michael Mitchell and John Murray. Mitchell was a long time union-side labour lawyer while Murray represented the management side on the review.

The purpose of this post is to highlight a sub-set of labour relations options the Changing Workplaces Review labelled “broader-based bargaining”. While the Review’s discussion of these options was largely ignored by the media, behind the scenes unions, employer associations, academics, and lawyers representing both management and labour, engaged in an intense debate over the pros and cons of broader-based bargaining options with unions  (to varying degrees) endorsing the concept and employer groups unanimously opposing it.

One of the broader-based bargaining options strongly endorsed by the final report of the Review involved measures making it easier for unions to organize franchise operations. It is the author’s opinion that the Ontario Government’s refusal to include this very modest proposal in Bill 148 was a serious mistake and a completely unnecessary capitulation by the Wynne government to employer lobby groups opposing the measure. The franchise proposal is discussed in detail later in this post but the long-term implications of not implementing the Commissioners’ franchise recommendation is articulated nicely in a January 11, Star Op-ed by Ontario Steelworker head, Marty Warren. In addition to allowing for greater unionization of franchise employees as Warren suggests, the Commissioners’ franchise recommendation could have served as an effective “bridge” to a more ambitious broader-based bargaining regime.

But before addressing the specific broader-based bargaining options discussed in the Changing Workplaces interim and final reports and why such regimes are important, some context is in order.

What is broader-based bargaining and why is it so controversial?

For the most part, the current industrial relations system in Ontario is rooted in the Wagner Act approach to collective bargaining. Under the Wagner Act model, it is assumed that the collective bargaining process will occur between one union and one employer at one location. For three or four decades following the war, this model was useful for workers employed in large, single site workplaces. However, in the post-1980 period, this model has been increasingly out of synch with a changing labour market.

For example, in the past 25 years the proportion of workers in smaller and “non-traditional” workplaces has been growing quickly. In fact, as of December 2015, there were 1.17 million businesses in Canada and of these, 1.14 million (97.9 percent) were small businesses, 21,415 (1.8 percent) were medium-sized businesses and 2,933 (0.3 percent) were large enterprises. In 2015, more than 85 per cent of workplaces in Ontario had fewer than 20 employees and nearly 30 per cent of all Ontario workers were employed in these small workplaces. It is important to note that these workplaces are generally associated with low wages, high rates of part-time, temporary, and contract jobs and an absence of health and pension benefits. Recent immigrants, women, and visible minorities are typically overrepresented in jobs in this sector.

Moreover, this sector of the economy has extremely low rates of unionization as the economics of organizing and servicing small workplaces is daunting. Employers such as Walmart, McDonald’s and Tim’s devote massive resources to keeping unions out of their shops and the resources unions must deploy to gain even a toe-hold with such employers is enormous.

In summary, for sectors of the economy where small workplaces are prevalent and non-traditional work prevails, the current structure of collective bargaining rooted in the single-employer, Wagner Act model no longer allows workers meaningful access to collective bargaining. This is where the notion of broader-based bargaining comes in – it expands the opportunity for collective bargaining to workers who currently face barriers to organizing under the traditional model. With the right broader bargaining regime, the hope is that more workers will receive the benefits of unionization – improved wages, benefits and working conditions – as well as stronger enforcement of legislated workplace standards.

The Changing Workplaces interim report and broader-based bargaining

The Changing Workplaces interim report proposed a number of possible broader-based bargaining regimes. As noted above, the employer response to the broader-based bargaining options put forward in the report was predictably (and uniformly) negative.

In contrast,  the union response to the interim report’s discussion of broader-based bargaining was generally positive. Moreover, after the release of the interim report,  it became clear that for a majority of unions supporting the concept, the leading candidate amongst possible broader-based bargaining regimes was something commonly referred to as the Baigent-Ready model (or just the B.C. model).

What follows is a brief discussion of the main features of the Baigent-Ready model.

What is the Baigent-Ready model?

In 1992, the B.C. government appointed a special panel of advisors to review its labour legislation. The advisers were John Baigent and Vince Ready on the labour side and Tom Roper on the management side. The report issued by the advisors included a recommendation for a sectoral certification procedure which would apply in sectors “historically underrepresented” by trade unions as determined by the B.C. Labour Relations Board, where the average number of employees at work locations within the sector was less than 50. This sectoral proposal was not supported by Tom Roper and was not implemented by the NDP government of the day.

Under the B. C. proposal, sectors were defined as geographic areas, such as a neighbourhood, city, metropolitan area or province, containing similar enterprises with employees performing similar work. An example of such a sector would be “employees working in fast food outlets in Burnaby”.

Under the proposed model, once a historically underrepresented sector is identified, then any union that can obtain at least 45% support in each of two “eligible” workplaces in the sector can trigger a certification vote (45% is the B.C. threshold for the proportion of the workforce at a given location which needs to sign cards – Ontario’s current threshold is 40%). The union would then have to win a majority in a secret ballot vote of all employees combined.  If the union was successful, it would obtain a sectoral certification.

Once a union was certified for a sectoral unit, it would then commence bargaining with all employers whose employees have been certified.  For example, if Unifor obtained a sectoral certification for “fast food workers in Ottawa” and it was certified at one Ottawa Tim’s and one Ottawa Wendy’s, then Unifor would bargain with an employers’ council comprised of representatives from Tim’s and Wendy’s towards reaching a standard collective agreement that would apply to both employers.

Perhaps most importantly, if Unifor then organized workers  at additional Ottawa Tim’s or Wendy’s locations (again, through a vote at each work site), and at outlets of other employers in the Ottawa fast food sector, the new outlets would be swept into the existing collective agreement.  The new employers would then be part of an employers council and be able to participate in the next round of collective bargaining.

It is worth noting that, unlike the B.C. model, most Ontario unions supporting a variation on Baigent-Ready proposed no limit on the average number of employees in a workplace to which the new bargaining regime would apply. Again, in the original B.C. model the average number of employees at work locations within an eligible sector would have to have been less than 50. Presumably, Ontario unions are eying larger retailers such as Walmart, Costco, HBC, Canadian Tire, etc. in adopting the “no limit” position.

In summary, supporters of variations on the Baigent-Ready sectoral bargaining regime detailed in the Changing Workplaces interim report believe that the implementation of such a proposal would give unions an incentive to organize smaller workplaces by making the organization of such workplaces more cost-effective. Further, the organization of small workplaces along sectoral lines also provides the opportunity for more effective collective bargaining, as a larger number of employees increase the union’s bargaining power. As a result, there will also be more pressure on non-union employers in the industry to match the terms and conditions of employment provided under existing sectoral collective agreements. The B.C. model also preserves employee choice by requiring employees at each location to support the union for the purposes of its initial sectoral certification and subsequently if it wishes to expand the scope of its existing collective agreement.

Finally, it should also be noted that the B.C. model preserves the notion of union competition. Under the model, any union can apply to represent workers within a designated sector. So for example, Unifor might represent workers at seven different fast food outlets in Ottawa, with three different employers. The United Food and Commercial Workers might then move into the sector and organize three McDonalds and three Pizza Pizzas and bargain a collective agreement for those employers. Finally, the Steelworkers might nab a few Tim’s and a couple of Burger King’s.  The B.C. model allows Unifor, UFCW and  the Steelworkers to each have their own Ottawa area, fast food sector collective agreement and to bargain with one employer association comprised of the employers they have organized in the Ottawa fast food sector.

The Changing Workplaces final report and broader-based bargaining.

While there was considerable union support for at least some variation on the Baigent-Ready model, the final report of the Changing Workplaces review did not end up endorsing the regime. While the Commissioners concluded that the B. C. idea was creative and worthy of further exploration, they thought it would be difficult in Ontario to move from a situation where a sector had almost no collective bargaining (such as the fast food sector) to one in which a multitude of employers in that sector would have to bargain together.

According to the Commissioners:

We have concluded that in order for broader-based multi-employer bargaining to be workable, there has to be a history of at least some collective bargaining in the sector. It is too large a step to go from no bargaining experience at all to a highly sophisticated multi-employer, multi-union collective bargaining regime. In other words, before forcing employers to bargain together, collective bargaining has to take root first with individual employers.”

While the commissioners concluded that Ontario was not yet ready for the B.C. model, they did recommend a significant “bridging” (my word) regime between the current Wagner Act model and something like a full fledged sectoral regime along the lines of Baigent-Ready. In the Commissioners’ words, such a regime would facilitate:

“the organization of multiple units of a single employer in specified sectors/industries where there are vulnerable workers in precarious work……potentially offering a way forward to multi-employer bargaining down the road. For example, if employers and franchisees in restaurants, retail, fast food and other specified sectors, become part of a collective bargaining regime as single employers, this could lead to some natural expansion towards multi-employer sectoral bargaining in those areas. An evolutionary approach is more likely to be successful than an imposed multi-employer model that has no current foundation to support it.”

In the broadest sense (and to simplify things considerably),  the approach endorsed by the Commissioners in their final report was similar to the B.C. model except for the crucial difference that the B.C. proposal would apply to multiple employers in a designated sector and geographic area while the endorsed proposal only applies to a single employer in a designated geographic area.

In these recommendations, the Commissioners strongly endorsed the expansion of the OLRB’s power to consolidate multi-location, single-employer bargaining units in new bargaining relationships, especially in sectors where there was a preponderance of vulnerable workers. They then proposed two similar, but separate, recommendations: one for multi-location operations that were directly, corporately-owned and one for those that were franchisee-owned. While the government included the less controversial corporate-owned recommendation in its Bill 148, it did not accept the Commissioners’ recommendation for a new, similar regime for franchises. Again, in this author’s opinion, this was a serious mistake on the part of the Wynne government.

Let’s start with the changes proposed for corporate-owned, multi-location brands – the part of the proposal accepted by the government (for the most part) and included in Bill 148.

Consolidating multi-location bargaining units directly owned by a single employer

As the Commissioners point out, giving a labour relations board discretionary power to consolidate bargaining units directly owned by a single employer is not a new concept for Canada – in fact, the Ontario NDP government of Bob Rae included a virtually  identical provision in its short-lived labour law reform of 1992. More generally, the discretionary authority of the Ontario Labour Relations Board (OLRB) is limited compared to other Canadian labour boards. In British Columbia, for over 40 years, the British Columbia Labour Relations Board has had the jurisdiction to modify its policy of bargaining unit determination in industries that are difficult to organize in order “to afford collective bargaining some room to put down firm roots”.

The Commissioners essentially argued that in multi-location, single-employer situations, it has become virtually impossible to establish meaningful collective bargaining relationships in sectors such as retail stores, restaurants, fast food, and similar workplaces, especially when each location is small.  Put bluntly, a single small unit of a large employer with multiple locations is likely to have almost no bargaining power and the chances of failure in achieving meaningful collective bargaining are very high.

The Commissioners rightly concluded that viable collective bargaining where a significant improvement in terms of wages and working conditions can be achieved, is likely only possible where there is a larger unit. If units can be certified on a smaller basis and then consolidated afterwards by the OLRB, this could make collective bargaining in those sectors more viable. The Commissioners made it clear that while initial employer-union discussions would be required, should there be no agreement on consolidation, either party should be able to apply for consolidation. In other words, they were fully aware that restricting applications to situations where the employer and the union agreed on the matter, wouldn’t advance the goal posts much (i.e. in the vast majority of cases, the employer would not agree to an application for consolidation).

The Commissioners further argued that the likely reason why the Ontario Labour Relations Act (OLRA) did not provide for the consolidation of bargaining units, particularly with multiple smaller locations, was not rooted in a matter of labour relations principle. Their explanation was that in the 1940’s when the OLRA was first enacted, the economy was dominated by many single location enterprises. The traditional Wagner Act model, on which Ontario’s current labour law is based, focuses on union organization at the enterprise level. As such, the OLRA simply was not designed for an Ontario economy that has seen massive growth in the service sector, a significant increase of multiple small locations of single, large, corporate employers, and the development of large-scale franchising ( Tim’s, McDonald’s, etc.). In other words, the Commissioners found that the laws governing the powers of the OLRA had simply failed to evolve with the changing structure of business organization and the labour market since the 1940’s.

Having made a strong case for granting the OLRB the authority to consolidate newly certified bargaining units of a single employer on application from either party, the Commissioners went to great lengths not to tilt the playing field too far towards the union side.

For example, in addition to limiting the consolidation to situations where the unit to be consolidated had not yet reached a collective agreement, the Commissioners felt that it was important that the consolidation of units not be automatic (as in Baigent-Ready). In their view, the parties should first have to discuss and bargain the terms upon which the existing agreement applies, before either party could apply for consolidation. If the parties could not agree, either party ought to have the right to persuade the OLRB that the existing agreement should not apply in whole or in part to the new units, or should be applied in a restricted or particular way.

The Commissioners also made it clear that the consolidation power granted to the OLRB was intended to apply only in restricted situations. In their eyes, this was a specialized provision, intended to provide an option for unionization where there are multiple units of a single employer, or smaller units of a large, single location employer, in sectors/industries where employees are historically underrepresented by unions. In the Commissioners’ view, the test would centre around whether the proposed new consolidated unit contributed to the development of an effective collective bargaining relationship and served the development of collective bargaining in the sector.

Again, as indicated above, the government mostly accepted the Commissioners’ proposal on corporate-owned locations and included it in Bill 148. However, the government unnecessarily narrowed the regime by restricting applications to the OLRB for consolidation of units to a three month period following certification – a rather arbitrary provision that was rightfully opposed by labour groups.

To be fair, it should also be noted that in Committee following second reading, this section of Bill 148 was amended to include a provision that would allow employers and unions the right to negotiate a consolidation agreement (that would then have to be approved by the OLRB) in more mature bargaining situations (i.e. that didn’t require at least one bargaining unit that had not yet successfully bargained a collective agreement). That said, there would generally be little or no incentive for an employer to agree to such a consolidation request so such a provision will likely have little impact.

The franchise recommendation the government rejected

As described above, the Commissioners believed that granting the OLRB the ability to consolidate units at multiple locations of a single employer would create a structure that would make employee access to meaningful collective bargaining possible. But what they also believed was that essentially  the same OLRB powers (with a few, minor differences) should apply equally to corporately-owned locations and multiple franchise locations of the same corporate entity.

In other words, the Commissioners believed that it shouldn’t matter whether a particular location is directly corporate-owned or a franchise when it comes to collective bargaining.  So although technically a franchised based operation consisted of  multiple employers, these franchise employers should be deemed tantamount to a single employer with multiple, corporately-owned  locations and should be subject to essentially the same rules when it comes to collective bargaining.

In essence, the Commissioners took the position that franchising is simply one form of chain store operation. Some chains may use a corporate-owned model for each location or they may use a franchise model – or do a combination of both. In fact, the structure used at any given location may even change from directly corporate-owned to franchise and vice versa. However, the crucial issue for the Commissioners was that whatever the technical form of the chain location, once certified, the different locations should have the right to apply to the OLRB for consolidation in a designated geographical area.

In summary, the Commissioners in their final report merely recognized the obvious: that there are huge and growing sectors of the economy that are rooted in the franchise model where there is almost no union representation. The current Ontario Labour Relations Act does not explicitly deal with franchising only because, at the time of its development, franchising was not a significant factor in the economy. In other words, there is absolutely no reason to treat franchises any differently than corporately-owned locations for labour relations purposes.

On all this, the government did not agree and as indicated above, the Commissioners’ franchise recommendation was not included in Bill 148 (albeit the OLRB has been granted the power to consolidate multiple locations of a single franchise owner). As of this writing exactly 12 days after the bill came into  effect, the consequences of this omission are already glaringly obvious.

Implementing the strategy

The rejection by the Ontario Liberal government of some variant on the Baigent-Ready broader-based bargaining model was entirely predictable given massive employer opposition and the failure of the final report of the Changing Workplaces Review to endorse it. And to be fair to the government, there was something short of complete unanimity within the labour movement on the exact architecture of an ambitious, new broader-based bargaining regime.

Nevertheless, the rejection of at least some variation on the  broader-based bargaining regime most favoured by Ontario labour, still represents a significant  set back to a movement that has been experiencing private sector declines in union density for several decades. While the modest Bill 148 gains on the Wagner Act side (a limited expansion of card-based certification, easier access to first contract arbitration, etc.) as well as the expanded powers given to the OLRB to consolidate single employer, corporately-owned bargaining units, were real and hard fought victories, they are unlikely to reverse the long-term trend of a diminishing union presence in the private sector. In fact, even had labour secured full card certification and stronger first contract arbitration provisions in Bill 148, private sector union density in Ontario would almost certainly continue to decline. Given the changes in the labour market since 1980, there are simply limited returns for private sector unions on the Wagner Act side of the policy ledger.

The Government’s rejection of the Commissioners’ franchise recommendation, while not entirely surprising given the intensity of the employer opposition to the proposal,  was in some ways more disappointing than the more predictable rejection of the ambitious Baigent-Ready model. The Commissioners went to great lengths to make clear that they were not recommending a system where franchisees of different franchisors were compelled to bargain together (something closer to the Baigent-Ready model described in detail, above) and also made it clear there was nothing automatic about the regime (i.e. the OLRB was free to accept or reject a party’s application for unit consolidation). Moreover, applications for consolidation would only be considered by the OLRB if they were from the same union in the same geographic area and included a bargaining unit that had not yet reached a collective agreement. If Ontario’s labour movement couldn’t convince the Wynne government to include this very modest, Commissioner-endorsed proposal in Bill 148, it’s clear that it has a very long way to go to convince the government to pass something more ambitious that would really allow labour to reverse the negative, private sector unionization trends of the past 30 years. For example, something like Baigent-Ready.

Fortunately for organized labour and its allies, there is a provincial election coming up in Ontario in June 2018, and there is still a chance for labour to get broader-based bargaining included in the Liberal and NDP election platforms. To achieve this, labour needs to be quite clear to those parties that it is not limiting its labour law reform agenda to Wagner Act staples such as card certification. It needs to forcefully communicate to the Liberal and NDP platform writers (and not just to the party leaders) that it wants a detailed commitment to a Baigent-Ready like sectoral bargaining regime spelled out in their election platforms. If such a regime is not spelled out in some detail in the election platforms, business opposition to such a scheme will overwhelm even a NDP government – much less a Liberal regime – as corporate interests will claim that the implementation of such a regime had no electoral mandate.

In this vein, it is an extremely encouraging sign that labour leaders such as Marty Warren of the Steelworkers have been forcefully pointing out the missed opportunity (and the immediate consequences of that missed opportunity) that the absence of the Commissioners’ franchise recommendation in Bill 148 represents.

Further, the Commissioners’ suggestion that  a franchise regime could be a “bridge” to a more ambitious regime such as Baigent-Ready, allows Liberal and NDP platform writers some implementation flexibility. In other words, the party platforms could propose that a modest labour package (which would include the franchise recommendation) would be implemented in the first six months of the new government’s mandate while a more ambitious broader-based bargaining regime would take effect two or three years later after some experience with the franchise model.

In conclusion, Ontario private sector workers deserve access to meaningful collective bargaining –  especially those in precarious, low-paid work. Bill 148 fell considerably short of creating a bargaining regime that would provide such access and unless there are specific, detailed proposals outlined in the Liberal and/or NDP 2018 election platforms, Ontario governments headed by either the Liberals or the NDP, will not be able to implement such a regime. (Of course, it is entirely possible that neither party will form the government following the 2018 election. That possibility will be explored in a subsequent post).

The hard fact is that the only way that any Ontario government can withstand an employer lobbying campaign claiming that the government of the day has no mandate to implement what employer interests will surely view as a radical, pro-labour change in Ontario’s collective bargaining regime, is to include at least some of the details of such a regime in its 2018 election platform.

A further post will explore the unfinished business related to the reform of Ontario’s Employment Standards Act.

 

 

 

 

 

 

 

 

 

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