In early January 2000, new provisions designed to limit the consequences of what are known as orphan clauses were added to the Act respecting labour standards.1 These prohibit collective agreements from providing for clauses that create differences in treatment, based solely on the hiring date, in some of the employment conditions of workers who perform the same tasks.
While a number of the lower court decisions have interpreted these provisions restrictively, the Court of Appeal of Québec has recently made some clarifications as to their application.2
The matter began when a Canadian telecommunications giant created a spin-off company. The new company started up by hiring employees from its parent company and recruiting newcomers. These were the circumstance under which the employer and union initially entered into a collective agreement that provided for various job categories that included separate categories for both old and new employees, each with their own pay scales. When the agreement first came up for renewal, some of these job categories were merged, though the pay ranges remained separate.
Based on the prohibition placed on orphan clauses, the Commission des normes du travail (CNT) brought an action on behalf of the newly recruited employees and sought reimbursement of the wage gap generated by the contested job category.
The employer argued that the legislation did not apply because the hiring date was not the only factor explaining the difference. If that legislation did apply, the employer invoked the exemption that temporarily allows such a situation if the difference is eliminated within a reasonable period of time. The employer further asked that the union be jointly held liable owing to the fundamental role it played in negotiating the clause.
In the Superior Court judge’s opinion, the circumstances clearly revealed a difference based on hiring date. As for the exemption, the elimination of that difference within a reasonable period of time implied that the remedy had to take place during the term of the collective agreement. Lastly, he refused to impose any liability whatsoever on the union in the absence of any evidence that the latter was at fault.
The Court of Appeal upheld the Superior Court’s analysis of the difference in treatment. It was also of the view that the employer could not invoke the exemption because it failed to adduce evidence that the difference in treatment had been eliminated. However, Justice Beauregard went on to specify that a reasonable period of time is not limited to the term of the collective agreement, as stated by the Superior Court, but will vary depending on circumstances: the greater the difference, the longer the timeframe. To remedy that difference, an employer need not necessarily speed up the rate at which its younger employees’ wages are increased; the solution could just as easily be decreasing the older employees’ pay by freezing their wages until both job categories catch up with each other. As the court pointed out, in a unionized environment, everything is negotiable. Still, this type of issue requires “[TRANSLATION] a lot of good faith and fairness on all sides.”