Report in which the committee requests to be kept informed of development - Report No 286, March 1993

Case No 1624 (Canada) - Complaint date: 06-FEB-92 - Closed

1. 194. In a communication dated 6 February 1992, the World Confederation of Organizations of the Teaching Profession (WCOTP) submitted a complaint of violations of freedom of association against the Government of Canada (Nova Scotia), on behalf of the Nova Scotia Teachers' Union (NSTU).
2. 195. The federal Government, in a communication dated 10 November 1992, transmitted the observations and information from the Government of Nova Scotia.
3. 196. Canada has ratified the Freedom of Association and 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 complainant's allegations

1. 197. In its communication of 6 February 1992, the complainant organization alleges that the Government of Nova Scotia violated Conventions Nos. 87 and 98 by enacting Bill 160, an Act respecting Compensation Restraint in the Public Sector (the "Act", extracts of which are annexed hereto), which seriously restricts the right of public sector teachers freely to bargain their salaries and working conditions. (The present document should be read in conjunction with Case No. 1606, 284th Report, paras. 506-584, another complaint filed against the Government of Nova Scotia by a different complainant and raising substantially the same issues.)
2. 198. The NSTU represents some 11,000 public school teachers in the 22 school districts of the Province. A collective agreement (the "Provincial Agreement") between the Government and the NSTU was signed for the period 1 August 1989-31 July 1992, or until the conclusion of a new agreement under the Teachers' Collective Bargaining Act. The restraint legislation not only affects the Provincial Agreement but has also been ruled by the Public Sector Compensation Restraints Board established under the Act (the "Board") to apply to local agreements made with individual school boards.
3. 199. The provisions of the Act which directly affect the complainant are contained in sections 6, 7 and 8 (see Annex of Case No. 1606). Section 6 provides that any compensation plans finalized before 14 May 1991 cannot be changed except in accordance with the Act. The effect of section 7 is to extend the term of finalized compensation plans for a period of two years commencing on the actual or deemed date of their expiry and to delay any wage increases scheduled to accrue after 14 May 1991 for a two-year period from the date on which such increases were scheduled to be paid: for example, if a collective agreement was scheduled to expire on 31 December 1991, it will now expire on 31 December 1993. During the two-year freeze period, no change in rates of pay or wage scales can be made. Any scheduled increases in rates or wages bargained for are deferred: for example, if employees were scheduled to receive a percentage increase to the wage scale in a collective agreement on 1 September 1991, that percentage increase is delayed until 1 September 1993. Section 8 pertains to collective agreements which have not been finalized and which expired before 14 May 1991; it continues the expired compensation plans for an additional period of one year. Furthermore, the Act imposes an arbitrary increase in compensation rates of 5 per cent effective as of the actual expiry date of the collective agreement where such expiry date falls before 14 May 1991 and a new collective agreement has not yet been finalized prior to that date. If the collective agreement expired before 14 May 1990, however, compensation rates may be retroactively increased by 5 per cent for that additional year: for example, if a collective agreement expired on 31 December 1989, the expired compensation plan would be increased by 5 per cent in 1990 and 5 per cent in 1991 and the two-year freeze period would only commence on 1 January 1992.
4. 200. The Act has a discriminatory effect in that only public sector collective agreements are singled out. Furthermore, there are no comparable restrictions imposed on corporate revenues, income or profits or general price increases. Significantly, other government expenditures remain unaffected by the Act.
5. 201. It also appears that the selection of 14 May 1991, as opposed to any other cut-off date, would affect certain public employees more than others. For example, had 1 August 1991 or any date thereafter been selected by the Government, the third year of the complainant's Provincial Agreement and corresponding wage increases would not have been deferred. The freeze period would only have commenced after the actual date of expiry of the Provincial Agreement. Instead of selecting a date which would have frozen the wages and the right to collective bargaining of a larger proportion of public employees in the Province, the Government appears to have drafted its legislation in order to have the greatest immediate effect upon the complainant. Other large public employee unions have retained their entitlement to scheduled increases contained in their collective agreements because those increases were scheduled to take effect before 14 May 1991. The selection of that cut-off date as well as the definition of "date of expiry" (section 2(e)) have the effect of singling out the complainant as the primary target of the legislation. There was no consultation with the complainant concerning the impact of choosing that particular date for the retroactive effect of the Act.
6. 202. While section 22(3) of the Act permits the Board, under certain limited circumstances, to impose certain terms of employment, other than compensation rates, on parties to a collective agreement, this power is only upon application to the Board by an employer or both the employer and the bargaining agent. Therefore, if the employer refuses to make or join the application, the Board would have no jurisdiction. This procedure significantly prejudices employees with respect to their ability to seek the Board's authorization in otherwise justifiable circumstances.
7. 203. Section 22(2) applies where a collective agreement provides for a compensation rate increase over a one-year period which includes 14 May 1991 or where there is an historical relationship between two collective agreements with the same employer. The Board can either authorize an arbitrary increase in compensation rates or adjust the date of expiry. Section 22(2) provides that any such increase in compensation rates may be retroactive; however, the total of all increases cannot exceed 5 per cent in the year immediately preceding the date of expiry of the collective agreement. This superimposition of a government-appointed body to make arbitrary decisions on such fundamental terms as wages and duration of collective agreements is totally unacceptable in a democratic society which recognizes freedom of association as a constitutionally protected freedom.
8. 204. Compounding the arbitrariness of the Board's exercise of quasi-judicial powers is section 22(1) which provides that the Board's decision or order is final and conclusive and not open to question or review. Thus, despite the serious impact that a board's decision will have, there is no automatic right of appeal which is a fundamental principle of fairness in administrative law. The provision goes on to state that the Board may, if it considers it advisable to do so, reconsider, vary or revoke any decision or order made by it. This provides an excessive degree of discretion in the Board and, given that its membership is determined by the Government, which funds individual employing school boards, the appearance of bias is significant.
9. 205. The complainant had negotiated and concluded the Provincial Agreement with the Government and, as part of such negotiations, had made concessions on behalf of its membership and obtained benefits for its membership in order to conclude the agreement. The Government should not now take legislative action which denies the validity of the advantages bargained for, while maintaining the validity of the concessions made in the bargaining process. The complainant acted in good faith in negotiating and entering into the Provincial Agreement with the Government; it understood and believed that it was creating a binding arrangement at law, thereby establishing certain vested rights for its membership. The Government, by legislative action, is unilaterally relieving itself of its contractual obligations and therefore taking unfair advantage of teachers represented by the complainant and depriving them of their right freely to associate.
10. 206. The complainant points out that the Act provides for severe penalties, and concludes that it clearly violates the principles of freedom of association enshrined in Convention No. 87 and other relevant instruments as applied by the ILO supervisory bodies. It refers to cases that were previously examined by the Committee (Cases Nos. 1173, 1329 and 1350) concerning the British Columbia Teachers' Federation, in which the Committee had concluded that the legislation interfered with collective bargaining.

B. The Government's reply

1. 207. In its communication of 4 November 1992, the Government refers to the reply given in Case No. 1606 as far as general considerations on the Act are concerned and concentrates on those aspects specific to teachers, as raised in the complaint. It submits in substance that the collective bargaining restrictions imposed under the Act are in accordance with ILO principles, and that the Act did not discriminate against teachers.
2. 208. A three-year collective agreement signed on 23 February 1990 between the parties ("the Provincial Agreement") dealing with salary and related terms and conditions of employment provided that the teachers were to receive three salary increases: 5 per cent retroactive to 1 August 1989, 5 per cent on 1 August 1990 and 6.03 per cent on 1 August 1991. In addition to the Provincial Agreement, there are 21 local agreements dealing with other terms and conditions of employment such as sick leave, special leave, class size, etc. The Provincial Agreement had been negotiated in good faith; the Act was introduced on 16 May 1991, substantially after the Provincial Agreement was negotiated and came into effect, on 1 August 1989.
3. 209. The critical provisions of the Act for teachers are sections 6 and 7. (Section 9 does not apply to teachers because they are not in a "first collective agreement" situation; and section 8 does not apply, contrary to the assertion of the complainant, because the teachers' compensation plan respecting salaries did not expire before 14 May 1991.) Section 6 provides that any compensation plan finalized before 14 May 1991 cannot be changed except in accordance with the Act. "Compensation plan", by definition, means a collective agreement (section 2(c) of the Act). Both the Provincial Agreement and the "local agreements" fall within the Act and cannot be changed except in accordance with section 7 of the Act.
4. 210. The first two scheduled increases for teachers under the Provincial Agreement - 5 per cent each effective 1 August 1989 and 1 August 1990 - are unaffected by the Act and were received by the teachers. Section 7(1) of the Act effectively delays only the final compensation rate increase scheduled for teachers under the Provincial Agreement. The final increase, scheduled to occur on 1 August 1991, is delayed to 1 August 1993. Under section 7(2) of the Act, once the two-year delay period is completed (31 July 1993), the Provincial Agreement continues for a period equal to the period remaining for the Agreement when the two-year delay began. That period is one year. Therefore, as of 31 July 1993, the salary delay for teachers is lifted, their 6.03 per cent compensation rate increase scheduled for 1 August 1991 is effective and the Provincial Agreement continues for one year, to 31 July 1994.
5. 211. The Government points out that there is no roll-back of wages and no legislated reduction of a negotiated salary for teachers, but simply a delay of their scheduled 1991 salary increase. And at the end of the two-year delay, the teachers receive a salary increase far in excess of the inflation rate projected by the Conference Board of Canada (1.1 per cent and 2.4 per cent for 1992 and 1993, respectively). The Government submits that when all of this is considered, the Act does interfere with collective bargaining, but as an exceptional, temporary measure and only to the extent necessary to deal immediately with the economic crisis.
6. 212. Furthermore, teachers' living standards are protected by the Act. They received their first two scheduled compensation rate increases of 5 per cent and 5 per cent, effective 1 August 1989 and 1 August 1990, respectively. Their final scheduled increase is deferred only, and when received will be for a significantly larger amount than is projected to be negotiated for other groups at that time.
7. 213. During the two-year delay period, section 10(1)(b) of the Act allows public sector employees, like teachers, who are within Part I of the Act, to receive salary increases, for or in recognition of the following: (i) meritorious or satisfactory work performance; (ii) completion of a specified work experience; (iii) the successful completion of a course of professional or technical education; (iv) length of time in employment. In particular, clause (iii) applies to the teachers. The Provincial Agreement salary scale provides for increases to teachers based on increased educational qualifications. Teachers are entitled pursuant to clause (iii) to receive these increases throughout the delay period. Very few collective agreements and compensation plans covering other public employees subject to the Act contain specific provisions for salary increases based on increased educational qualifications. Consequently, the teachers are almost unique in their eligibility to receive increases throughout the delay period under section 10(1)(b)(iii). Substantial numbers of teachers in any given year qualify for increases based on improved educational qualifications.
8. 214. Clause (iv) also applies to the teachers. The Provincial Agreement includes an incremental salary structure which provides annual increases (ranging from approximately 3 per cent to 6 per cent) for each additional year of experience up to at least eight years and, for many teachers, up to a maximum of 11 years. The majority of collective agreements and compensation plans for public employees which contain incremental salary scales provide for a maximum of only five increment steps. Consequently, for employees covered by those agreements, only those who have less than five years' experience in a position are entitled to increases during the two-year delay period pursuant to section 10(1)(b)(iv). In contrast, all teachers with less than eight years of teaching experience and many teachers with less than 11 years of experience continue to receive annual increments, ranging from 3 to 6 per cent, during the two-year delay period. This is in addition to any increases to which they are entitled under clause 10(1)(b)(iii). In summary, the living standards of teachers are even better protected by this legislation than are those of many other public employees by virtue of the exemptions provided under section 10.
9. 215. The cases cited by the complainant (Nos. 1173, 1329 and 1350) are not directly relevant here. They deal with former British Columbia legislation where compensation stabilization statutes were prolonged; that legislation required prior approval of a collective agreement before the collective agreement could come into force, and the Act modified, in an adverse manner, freely concluded collective agreements by reducing previously negotiated pay to be received by teachers. None of these conditions is applicable here.
10. 216. As regards the complainants' allegations that the Act discriminates against public sector workers, the Government submits that the Act applies to both union and non-union public sector, to certain para-public bodies which receive government funding, to judges, politicians, and to the tariff concerning health care services ensured and paid for by the Government. The Government has also taken a series of sweeping measures to curtail the economic crisis: amalgamation, reorganization of several government departments; downsizing of the executive branch; streamlining of boards and commissions; cost savings in government's operations; privatization of Nova Scotia Power Corporation; implementation of the Voluntary Retirement Incentive Programme, etc.
11. 217. As to the allegation that the selection of 14 May 1991 as a cut-off date had the effect of singling out the complainant, the Government replies that the severity of the economic crisis required immediate action. Rather than laying off approximately 900 employees, the Government decided to delay salary increases. Some date had to be chosen. The choosing of a date was complicated because many public sector compensation plans are multi-year plans, like the teachers' plan, with a number of years remaining until their natural expiry. The Act affects not only the teachers' agreement but all other multi-year agreements which were finalized before 14 May 1991, but scheduled to expire more than one year after 14 May 1991. A total of 72 collective agreements (excluding the teachers' agreement), with 11 different bargaining agents and an additional 46 compensation plans affecting non-union employees have had negotiated increases (or in the case of non-union agreements, increases determined by the employer) deferred under sections 7 and 2(e). It is clear from this that the teachers' situation is by no means unique and that teachers are not the primary target of the legislation, as alleged by the complainant. The 14 May 1991 date was not targeted to discriminate against the complainant teachers, and does not discriminate against them. The teachers were not singled out. In fact, only one scheduled increase for the teachers, the third and final increase, was delayed by the Act. In other cases more than one scheduled increase is delayed by the Act.
12. 218. As regards the alleged arbitrary effect of the Act, in view of the discretionary powers granted to the Board, the Government asserts that the Board is primarily a regulatory/administrative board which oversees implementation of the requirements of the Act and assists the parties to understand the application of the Act to them. In practice, the Board has agreed to every request, without exception, which it has received to review an earlier decision made by it and has given the parties an opportunity to make representations. Of 13 such appeals, the Board has reversed its earlier decision in five cases, and upheld its earlier decision in eight cases. Therefore, in practice, the Board's discretion has proved not to be biased.
13. 219. It is also alleged that there is no automatic right of appeal from the Board, and that such a right is a "fundamental principle of fairness in administrative law". The Government submits that no principle of administrative law requires an automatic right of appeal. As is quite common in administrative law, a board's decision, as here, is only reviewable by a court upon prerogative writ, for an error of law or jurisdiction.
14. 220. The Government concludes that the Act is consistent with ILO principles and Conventions on freedom of association; it is not arbitrary and does not discriminate against the complainant teachers. It is a temporary measure, part of an overall approach of government to deal with an immediate economic crisis of devastating consequences for every sector of the life of the province. The delaying effect of the Act on the teachers will be lifted shortly, effective 31 July 1993.

C. The Committee's conclusions

1. 221. The Committee notes that this case involves certain restrictions on collective bargaining for public sector teachers in the Province of Nova Scotia (Canada) following the introduction of wage restraint legislation by the Provincial Government for a period of two years. The Government submits that these measures were necessary in view of the dire economic situation of the province; they were kept to a minimum and have a limited duration.
2. 222. The Committee refers to the comments it made in Case No. 1616 (Canada, 284th Report, paras. 631 ss.) as regards the general context in which this complaint was presented, and its views on economic arguments as a justification for restricting collective bargaining.
3. 223. The Committee further refers to its conclusions in Case No. 1606 (Canada/Nova Scotia, 284th Report, paras. 506-548) in which it recalled that where, for compelling reasons of national economic interest and as part of its stabilization policy, a government considers that it is not possible for wage rates to be fixed freely through collective bargaining, any restrictions should be imposed as an exceptional measure and only to the extent that is necessary without exceeding a reasonable period, and should be accompanied by adequate safeguards to protect workers' living standards. (Digest, para. 641.) The Committee of Experts has adopted a similar approach on this issue. (General Survey on Freedom of Association and Collective Bargaining, 1983, para. 315.)
4. 224. As regards the particular circumstances of teachers, the Committee observes that they in fact received two 5 per cent salary increases and that the third increment (6.03 per cent) initially scheduled to occur on 1 August 1991 will become effective on 1 August 1993, unless their bargaining agent decides to renegotiate the Provincial Agreement.
5. 225. The Committee further notes that the Act embodies special protective measures for teachers, in particular through section 10(1)(b)(iii) and (iv). The Committee cannot therefore conclude that the allegations of arbitrariness and discrimination are well-founded.
6. 226. As concluded in Case No. 1606 in respect of public sector workers generally, the Committee regrets that the Government did not give priority to collective bargaining as a means of determining employment conditions of its teachers but rather that it felt compelled to adopt the Act respecting Compensation Restraint in the Public Sector, 1991. It trusts that the restrictions on collective bargaining will be limited to a two-year period, and that unrestricted and free collective bargaining will resume thereafter.
7. 227. The Committee also stresses that, where a government seeks to alter bargaining structures in which it acts actually or indirectly as employer, it is particularly important to follow an adequate consultation process, whereby all objectives perceived as being in the overall national interest can be discussed by all parties concerned, in keeping with the principles established in the Consultation (Industrial and National Levels) Recommendation, 1960 (No. 113).
8. 228. In the view of the Committee, the expiry of the Act should render possible a return to a normal situation in which collective bargaining can take place freely with recourse being available, where appropriate, to independent arbitration. The negative effects on industrial relations that have resulted from the wage restraint legislation could, to some extent, be offset by consideration being given by the Government, in consultation with the unions, to ensuring that the collective bargaining system enjoys the fullest confidence of the parties. The Committee invites the Government to take such measures.

The Committee's recommendations

1. 229. In the light of its foregoing conclusions, the Committee invites the Governing Body to approve the following recommendations:
   • (a) The Committee regrets that the Government did not give priority to collective bargaining as a means of determining employment conditions of teachers, but rather that it felt compelled to adopt the Act respecting Compensation Restraint in the Public Sector, 1991.
   • (b) The Committee trusts that restriction on collective bargaining will be limited to a two-year period and that unrestricted and free collective bargaining will resume thereafter.
   • (c) The Committee stresses the importance of adequate consultation prior to the introduction of legislation through which the Government seeks to alter bargaining structures in which it acts actually or indirectly as employer.
   • (d) The Committee invites the Government to take measures, in consultation with the trade unions concerned, with a view to restoring a collective bargaining and arbitration system which enjoys the fullest confidence of the parties.
   • (e) The Committee requests the Government to keep it informed of the developments of the labour relations in the Province of Nova Scotia and, in particular, to indicate whether and when the Act respecting Compensation Restraint in the Public Sector, 1991, has effectively lapsed in respect of teachers in the province.

ANNEX A

1. Extracts of the Public Sector Compensation Restraint Act
2. ...
3. 2. In this Act,
4. (a) "Board" means the Board established pursuant to the regulations;
5. (b) "collective agreement" means
6. (i) a collective agreement as defined in the Civil Service Collective
7. Bargaining Act,
8. ...
9. (c) "compensation plan" means a collective agreement or, where employees do
10. not have a collective agreement, terms of employment;
11. (d) "compensation rates" means single rates of remuneration or ranges of rates
12. of remuneration, including costs of living adjustments, or, where no such
13. rates or ranges exist, any fixed or ascertainable amounts of remuneration;
14. (e) "date of expiry" means
15. (i) the day, on or after the fourteenth day of May, 1991, that a compensation
16. plan expires but for this Act, or
17. (ii) the day immediately preceding the day of the first scheduled increase in
18. compensation rates on or after the fourteenth day of May, 1991, provided for
19. by the plan,
20. whichever is earlier;
21. ...
22. PUBLIC EMPLOYEES
23. 5. This Part applies to
24. ...
25. (i) employees of a school board; ...
26. (k) employees of universities ...;
27. 6. A compensation plan finalised before the fourteenth day of May, 1991, shall
28. not be changed except in accordance with this Act.
29. 7. (1) Where a compensation plan was finalised before the fourteenth day of
30. May, 1991, then, notwithstanding anything contained in the plan, the plan
31. continues in effect in respect of that employee or group of employees, as the
32. case may be, for a period of two years from the date of expiry of the plan
33. with the implementation on or after the fourteenth day of May, 1991, of any
34. change in terms of employment set out in the plan except that
35. (a) there shall not be any increase in compensation rates; and
36. (b) the plan itself shall not be changed,
37. on or after the fourteenth day of May, 1991.
38. (2) Upon completion of the two-year period referred to in subsection (1),
39. (a) the compensation plan continues for a further period of time equal to the
40. period of time that remained for the plan when the two-year period began; and
41. (b) any change in compensation rates scheduled by the plan to be effective on
42. or after the fourteenth day of May, 1991, takes effect two years after the
43. date specified in the plan.
44. (3) Notwithstanding subsection (2) or anything contained in a compensation
45. plan,
46. (a) a collective agreement may, at the option of the bargaining agent of the
47. employees to whom the agreement applies, be renegotiated; and
48. (b) a compensation plan that is not a collective agreement may be changed,
49. in respect of any period remaining in the plan after the two-year period
50. referred to in subsection (1).
51. ...
52. 10. (1) During any period a compensation plan is continued by section 7 or 8,
53. an increase in compensation rates may be paid to or received by an employee
54. ...
55. (b) for or in recognition of
56. (i) meritorious or satisfactory work performance,
57. (ii) the completion of a specified work experience,
58. (iii) the successful completion of a course of professional or technical
59. education,
60. (iv) length of time in employment,
61. if such provisions have been expressly contained in the compensation plan that
62. applied to the employee immediately before the fourteenth day of May 1991.
63. 11. A compensation plan to which this Act applies, entered into or established
64. at any time, is of no force or effect to the extent that it provides for
65. compensation rates in excess of compensation rates permitted by this Act. ...
66. PART V
67. PAY EQUITY
68. 20. This Part applies to increases in compensation rates made pursuant to the
69. Pay Equity Act.
70. 21. Notwithstanding the Pay Equity Act, pay equity adjustments to which an
71. employee is entitled on the first day of September, 1991, pursuant to that Act
72. shall not be made until April of 1992 but shall be retroactive to the first
73. day of September, 1991, and nothing in this Act, except this section, affects
74. the Pay Equity Act.
75. PART VI
76. GENERAL
77. 22. (1) Where a question arises pursuant to this Act as to
78. (a) whether a compensation plan is a compensation plan to which this Act
79. applies;
80. (b) whether a compensation plan complies with this Act;
81. (c) the date of expiry of a compensation plan; ...
82. the Board shall decide the question and the decision or order of the Board is
83. final and conclusive and not open to question or review but the Board may, if
84. it considers it advisable to do so, reconsider any decision or order made by
85. it pursuant to this Act and may vary or revoke any decision or order made by
86. it pursuant to this Act.