On June 30, 2015, the Canadian federal government passed a law (“Bill C-377″) requiring unions to publically disclose sensitive financial information within six months of their year-end. The information will be published on the internet by the Minister of National Revenue.
Unless this law is repealed, it will come into force on December 30, 2015. Unions who fail to comply may be fined $1,000 per day of non-compliance, up to a maximum of $25,000.
The information unions must disclose includes (among other things):
- a balance sheet
- a statement of income and expenditures
- statements showing purchases and sales of investments and fixed assets
- statements of accounts and loans payable
- a statement of disbursements to officers and employees with compensation of over $100,000
Perhaps Bill C-377’s most sensitive information disclosure requirement is the statement of disbursements to officers and employees with compensation of over $100,000. Union executives with high levels of compensation may face greater scrutiny from union members whose dues are used to pay their compensation.
Unions have expressed a strong opposition to Bill C-377, but its justification is compelling. Greater financial transparency encourages greater financial accountability. Union members will have the ability to access their union’s financial information and see how their money is being spent. Where a union’s finances are mismanaged, members will be able to raise compelling, fact-based, objections.
Internationally, Bill C-377’s financial transparency requirements are not unusual. For example, in the United States, the Labor-Management Reporting and Disclosure Act establishes strict reporting requirements, including the disclosure of detailed financial statements, and statements of disbursements to officers and employees who received more than $10,000. The contents of these reports are made public. Likewise, in the United Kingdom, the Trade Union and Labour Relations (Consolidation) Act requires unions to disclose detailed financial statements, including details concerning the compensation of union executives.
Even within Canada, Bill C-377 is not unprecedented. For example, registered charities who enjoy tax exemptions similar to that of unions are required to file an annual information return that includes detailed financial statements. This information is publicly disclosed at www.cra.gc.ca/charitylists.
The full text of Bill C-377 is available here. Although Bill C-377 has been passed, it will be interesting to see whether it will be affected by the upcoming federal election. The NDP and the Liberals appear to strongly oppose it. For example, Justin Trudeau has referred to Bill C-377 as “a direct attack on Canadian workers and an attempt to weaken Canada’s labour movement”, and he has confirmed that the Liberals are committed to repealing it.
We will be watching this bill as December 30, 2015 approaches, and we will provide further information as it becomes available.