Collective agreements get creative

Provisions includes wage increases linked to price of oil, retention payments
By Gord Sova
|Canadian HR Reporter|Last Updated: 10/25/2011

It’s become commonplace to treat collective agreements simply as impediments — to flexibility, profitability and the smooth functioning of the workplace. That does not have to be the case.

The following selection of innovative contract provisions from collective agreements ratified over the past few months — compiled by the editors of Canadian Labour Reporter, a sister publication to Canadian HR Reporter — address specific workplace issues.

Wages tied to price of oil

The economy of Alberta is closely tied to the oil and gas industry but the most recent round of province-wide construction negotiations has taken this to a new level.

It’s not uncommon for wage increases to be fixed to an increase in the cost of living. Cost-of-living allowance clauses are heavily favoured by the Canadian Auto Workers (CAW) but have been used sporadically by most unions. They are not common in the public sector or in construction.

In the most recent round of negotiations, several construction trades in Alberta tied wage increases in the industrial sector to a formula that draws on both inflation and the price of crude oil.

In 2012, the wage increase will be the change in the consumer price index (CPI) for Alberta, with a minimum of two per cent and a maximum of four per cent. Then, in 2013 and 2014, the price of oil kicks in. Wage increases will be calculated every six months, based on one-half of the increase in the CPI and a factor representing the six-month average for the price of West Texas Intermediate Oil, in U.S. dollars. If the price is less than $60, the factor is zero and if it is $60 to $90, the factor is 0.5 per cent. It then ranges up to 1.5 per cent if the price is $125 or greater.

In addition, the construction trades in Alberta have compromised on employers’ demands for drug and alcohol testing with a voluntary rapid site access program (RSAP).

Workers take an initial urinalysis test and, each month, a random, computer-generated list of workers will be asked to take an oral swab test. Only workers on the job site will be tested — not workers who are at home.

Accumulating sick leave

Traditional sick leave plans, which have included an accumulation of annual sick days and a cash-out on resignation or retirement, have been under pressure from employers for a number of years and are becoming rare. The principal reason is the cost, especially as the bulge of the baby boomers approaches retirement.

Public sector employers — and this type of plan was largely limited to the public sector — have used several alternatives to accumulating sick leave.

In June 2011, employees at the Workplace Safety and Insurance Board (WSIB) in Ontario and members of Local 1750 of the Canadian Union of Public Employees ratified one such alternative. It exchanges the former annual allowance of 18 sick days, called “attendance credits,” for nine “wellness” days.

Attendance credits that have been earned are banked and may be used to either top up short-term disability (STD) or long-term disability (LTD) benefits, or may be cashed on retirement.

Wellness days can be used slightly more liberally than attendance credits. They can also be used as personal days for family emergencies, medical appointments and moving. And five unused days per year can be converted to vacation.

To make up for the loss of coverage, both the STD and LTD plans have been modified. STD begins on the fourth day of absence and replaces 75 per cent of salary for 127 working days.

Under the former scheme, it began after 40 days and replaced 66.6 per cent for 20 working days. LTD begins later, after 131 working days rather than 61 days, but continues to replace 66.6 per cent of salary.

Closure and retention

Many companies that extract primary resources face a limited future — oil deposits are used up or mineral seams are worked out. Sooner or later, a company has to move its operations. A deadline of this type is facing Vale’s operations in Thompson, Man.

While the nickel refinery and smelter did not have to be shut down because of an exhaustion of local resources, the same pressures are at play. The company has announced the closure will take place in 2015.

But, in the meantime, it wants to retain the 500 skilled and experienced employees it needs to run the operation. To that end, a collective agreement with Local 6166 of the United Steelworkers was ratified on Sept. 15, 2011, and expires on Sept. 15, 2014, several months prior to the planned closure.

It includes two “carrots” to convince employees to stay on the job, rather than looking for alternate employment. One is a $10,000 “transition and retention” payment to be made to active employees in four installments: $4,000 on Oct. 15, 2011, and $2,000 on July 15 of 2012, 2013 and 2014.

In addition, employees laid off due to the closure will have priority for any jobs that open up at Vale’s other operations in Sudbury and Port Colborne, Ont., and Voisey’s Bay and Long Harbour, N.L.


Another albatross around the necks of employers is underfunded pension plans, as seen at Queen’s University in Kingston, Ont. When the school began negotiating with the three locals of the Canadian Union of Public Employees (CUPE) that represent maintenance, custodial and technical staff, modifications to the pension plan were high on the agenda.

The province of Ontario has also promised three-year solvency relief to university pension plans in trouble, but only if the parties make improvements to plan viability.

One way to do this is by increasing contributions. Both CUPE and the Queen’s University Faculty Association (QUFA) have agreed to increase member contributions on salary above the year’s maximum pensionable earnings (YMPE) from six per cent to nine per cent by the end of the term of the current agreement.

Another way is by limiting payouts in the near term to retain capital in the plan. To both these units, the university proposed a drastic increase in the actuarial reduction for early retirement from two per cent per year to six per cent between age 60 and 65. (The reduction was previously six per cent per year before age 60 and this remains.)

CUPE and QUFA agreed to a smaller increase of three per cent per year between age 60 and 65.


Finally, achieving a better balance between work and the pressures of life and family is a goal of many employers and employees. In the case of miners who fly into a remote location for their work, the pressures resulting from being away from family for weeks are that much greater.

The Raglan Mine in extreme northern Quebec is one of those locations. Operated by Xstrata, the mine houses employees in a dormitory while they are on shift rotation.

One of the employees’ demands in the most recent round of negotiations was a reduction of time spent at the mine. They were away from their families for two-thirds of the year. A new shift schedule is being tested as a pilot project that will reduce time away to one-half, closer to the norm for other remote mines.

Retention is also an issue at Raglan, so the contract provides for a healthy $6,000 signing bonus and a further $7,500 over the final three years of a six-year agreement.

GordSova is editor of Canadian Labour Reporter. He can be reached at or (416) 298-5129 or for more information, visit

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