Thursday, February 2, 2017

Statutory Criteria in Interest Arbitration by Greg

At this year's Gerrand Rath Johnson Labour Law Conference, I had the opportunity to present on interest arbitration - which may become more important to Saskatchewan unions now that it represents the statutory alternative to job action in workplaces which fall under the essential services regime in Part VII of the Saskatchewan Employment Act ("SEA").

The general principle applied by interest arbitrators is the "replication principle", which was set out by Arbitrator Hope in Beacon Hill Lodges of Canada v. H.E.U., 1985 CarswellBC 2912 (Hope) at para. 56-57:

(A) board of arbitration should attempt to replicate the result which would have occurred if the collective bargaining process had not been interrupted by arbitration…

(A) board of arbitration is not expected to embark upon a subjective or speculative process for divining what might have happened if collective bargaining had run its full course. Arbitrators are expected to achieve replication through an analysis of objective data from which conclusions are drawn with respect to the terms and conditions of employment prevailing in the relevant labour market for work similar to the work in issue.

Generally, interest arbitrators have great flexibility in determining which factors to apply as they set the terms of a new collective agreement through interest arbitration.

However, the SEA's alternative to full collective bargaining includes statutory criteria required to be considered by the arbitration or arbitration board:

7‑21     In making an award pursuant to this Division, a mediation‑arbitration board or single mediator‑arbitrator:

(a)     shall consider, for the period with respect to which the collective agreement between the public employer and the union will be in force, the following:

(i)      wages and benefits in private and public, and unionized and non‑unionized, employment;

(ii)     the continuity and stability of private and public employment, including:

(A)    employment levels and incidence of layoffs;

(B)    incidence of employment at less than normal working hours; and

(C)    opportunity for employment;

(iii)    the general economic conditions in Saskatchewan; and

(b)     may consider, for the period with respect to which the collective agreement between the public employer and union will be in force, the following:

(i)      the terms and conditions of employment in similar occupations outside the public employer’s employment taking into account any geographic, industrial or other variations that the mediation‑arbitration board or single mediator‑arbitrator considers relevant;

(ii)     the need to maintain appropriate relationships in terms and conditions of employment between different classification levels within an occupation and between occupations in the public employer’s employment;

(iii)    the need to establish terms and conditions of employment that are fair and reasonable in relation to the qualifications required, the work performed, the responsibility assumed and the nature of the services rendered;

(iv)    any other factor that the mediation‑arbitration board or single mediator‑arbitrator considers relevant to the matters in dispute.

See also s. 6-90(3), setting out the same criteria with respect to firefighters.

On a first review, it is not clear why an interest arbitrator would be required to take into account wages and benefits in non-union and private-sector workplaces which are arguably not comparable to the one at issue, particularly since it would seemingly mandate consideration of what are generally inferior terms and conditions. (Note that the criteria apply to workplaces which are offering public services - which is of course the rationale for offering interest arbitration as an alternative to job action and free collective bargaining.)

Similar criteria in Alberta have been held to be of relatively little effect in their impact on the role of an interest arbitrator. Milvain J. described how arbitrators have applied Alberta’s statutory criteria, cited with approval in City of Medicine Hat v Medicine Hat Fire Fighters Association, IAFF Local 263, 2014 CanLII 50000 (AB GAA) (Sims):

(I)t is only consideration that is required not that slavish acceptance be given.  This seems to be a sensible thing to do because all of the matters referred to may not apply to every case, and those that do apply to a case may do so in greater or lesser degree depending on the circumstances surrounding the case.  In the final analysis, it is up to the alerted arbitrator to use discretion as to how the suggested matters shall be applied in light of all considerations which must be made in order that a fair, reasonable and just conclusion may be reached within the law.

However, the lone reported Saskatchewan case interpreting the statutory criteria applied them as having a "softening effect" on the wage increase which would otherwise have been awardedYorkton (City) v Yorkton Professional Fire Fighters’ Association, International Association of Fire Fighters, Local No. 1527, 2014 CanLII 86899 (SK LA) (Ish) at para. 59.

It remains to be seen whether arbitrators operating under these criteria will ultimately follow their Alberta counterparts in treating the statutory criteria as merely a statement of the normal principles of interest arbitration, or whether they will use the terms of the SEA to substantially limit public-sector compensation due to factors originating far outside the workplace. And if both unions and employers recognize the dangers of having their collective bargaining agreements governed by extraneous considerations, they may wish to agree on their own interest arbitration processes rather than following the ones set out under the SEA.

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