Recent recognition that the right to a collective bargaining process is protected by the Canadian Charter of Rights and Freedoms (Charter) has raised a number of questions about the ability of legislatures to amend statutory labour relations regimes.

In a precedent-setting decision, the Ontario Court of Appeal in Independent Electricity System Operator v Canadian Union of Skilled Workers (IESO), released on May 8, 2012, held that the Charter does not guarantee work opportunities to members of labour unions, and the promotion of economic competition is a legitimate basis for legislative action. Characterizing the Court of Appeal’s decision as flawed due to various errors of law, the Canadian Union of Skilled Workers and Labourers’ International Union of North America (the Unions) sought leave to appeal to the Supreme Court of Canada. The Supreme Court of Canada recently denied the Unions’ application for leave. In light of the Supreme Court of Canada’s decision, the Court of Appeal’s precedent-setting ruling on the scope of section 2(d) Charter rights has been affirmed.

Background

The Ontario Labour Relations Act, 1995 (the Act) has special rules applicable only to construction companies and trade unions operating within Ontario’s construction industry. A series of decisions from the Ontario Labour Relations Board (the Board) expanded the application of these special rules to encompass many consumers of construction services, such as school boards, municipalities, banks and retailers. The effect of this expanded application was to create a monopoly labour supply arrangement in favour of particular construction industry trade unions. Effectively, various construction industry trade unions were guaranteed any work opportunity created by the needs of various consumers of construction services. Concurrently, these consumers were prohibited from seeking a supply of labour and construction services through a competitive or open tendering process.

Legislative response

In 1998 and 2000, the Ontario legislature responded by amending the Act to distinguish between consumers of construction services and firms that carry on business in the construction industry for profit. Pursuant to this distinction, consumers of construction services are permitted to apply to the Board to be declared a “non-construction employer.”  A non-construction employer is a consumer of construction services owing no monetary or collective bargaining obligations to construction trade unions. Upon a declaration of non-construction employer status all construction industry collective bargaining rights and collective agreements are deemed terminated.

The Court of Appeal’s decision

In a unanimous decision, the Ontario Court of Appeal affirmed the constitutionality of the non-construction employer provisions of the Act. Looking to the economic element of the case before it, the court found that the legislative purpose of promoting economic competition was bona fide. In reaching this conclusion, the court accepted that the interests of the Unions’ members could be negatively affected through the loss of potential employment opportunities. However, in a statement that helps define the parameters of the constitutional right to a collective bargaining process, the court held that the Charter does not extend constitutional protection to employment opportunities.

Given the immediate effect of a non-construction employer declaration (i.e., the complete termination of collective agreements and bargaining rights), the court was also required to consider the Unions’ claim that a declaration would result in substantial interference with the constitutional right to a collective bargaining process. The court affirmed that freedom of association guaranteed by the Charter is a right of individuals, not unions as institutions. As the Unions could not point to any individual associational activity at the foundation of their claim for Charter protection, it was dismissed. The court also stressed that the Charter does not guarantee access to the Act’s special construction industry rules or any other particular collective bargaining process, which was effectively what the Unions were seeking.

The Supreme Court of Canada

The Unions each sought leave to appeal to the Supreme Court of Canada. They argued that the complete unilateral nullification of established collective bargaining rights at the request of an employer was inconsistent with section 2(d) of the Charter. They also argued that the Court of Appeal had failed to take into account the significance of critical job security protections negotiated on behalf of the Unions’ members, as well as the overall impact of a non-construction employer declaration on the right to be represented by a union. The Supreme Court of Canada dismissed the Unions’ application for leave to appeal, affirming the Ontario Court of Appeal’s decision.

Conclusion

The IESO decision is an important step in defining the constitutionally permissible scope of legislative action in the labour law context. The courts have affirmed a legislature’s right to promote competition within the economy, while at the same time affirming the role of the Charter in protecting individual, not organizational, rights.